December 12, 2005
You Will Never be Treated Like a Customer…
Until you start acting like one. Many folks who find themselves playing the role of patient think, mistakenly, that they should get better service than they do because they are the physician's customer.
Well, not exactly. Since a third party pays the bill at an extremely high cost of transaction to the physician and after confiscating incredibly large fees either directly or indirectly from the patient to do so, your ability to act like a normal purchaser of services is markedly diminished.
It is further diminished by the government, which defines what services may be sold, by whom, what constitutes the service, and how much they will pay for it which in turn usually determines what you will pay for it.
So it is no surprise that the beginning of a recent Wall Street Journal poll began with the words, “Few Americans try to negotiate lower health-care costs….”
We've been trained not to do that. First, we are led to believe that we are not capable of understanding the subject and need “professional” interpreters. Further hindrance comes from the profession itself which implies negotiating with a physician would be akin to negotiating with your priest.
The better news was the second half of the sentence of the November 22 report, “…a new Wall Street Journal Online/Harris Interactive health-care poll finds…many report success when they do try.”
This too is no great surprise. The pricing of healthcare services is totally arbitrary, massively inflated, and completely decoupled from the cost of production. The truth is there is a lot of wiggle room in pricing.
The results of the poll are interesting:
“The poll, which surveyed 2,027 adults about how likely they are to haggle over health-care costs and how often they do so, found Americans aren't much more likely to negotiate than they were in 2002, when Harris conducted a similar survey.”
“However, the poll finds that when Americans do engage in discussions about costs, they are more likely to feel that they have been successful in getting a lower price for health-related products and services than in 2002. For example, about 64% of those who tried to negotiate a bill with their dentist said they were successful, compared with 47% who were successful in 2002. A majority of U.S. adults who tried to negotiate lower bills with doctors and hospitals also reported success.”
"This suggests that as we continue to more toward a world of 'consumer-directed health care,' consumers will find that they are increasingly able to negotiate for health-related goods and services as they do in other sectors of the economy," says Katherine Binns, senior vice president at Harris Interactive.”
The reason given for not engaging in more negotiation process is pretty weak:
“However, fewer than half of those polled say they are likely to try to negotiate lower bills over the next two years. One reason patients may be less concerned with negotiating lower costs now, says Ms. Binns, is that health plans these days allow more choice and options up front, so people are more informed about what products and services are covered by their insurance companies, and what they're expected to pay.”
I'm not willing to give the health plans a pass on this. Their price lists are no more rational or valid or related to the cost of production than the government. And I believe it is not a stretch to assume they are tilted to the insurance company's advantage and not the patient's.
Pricing will never be rationalized in healthcare until:
The financial transaction and the service transaction of healthcare occur between the same two people.
Then and only then will patients become customers to the physician. And the true cost of production will be known because there will be a reason to know it. And point-of-service innovation in both care and service will be rewarded. Pay for performance will be real. And when this happens, prices in healthcare will implode for many--if not most--current services.
How does this happen?
Health savings accounts are a step in the right direction. The creation of other financial vehicles that promote the transparency of cost and quality are another. The separation of finance from delivery in healthcare is a third.
Other things need to happen too. Transparency of information. Connectivity. Access to information anywhere and anytime. Decisioning tools. Distributed healthcare.
Many of the items in this latter litany will become available only when the demand of the customer makes it so. And this only happens when they start behaving like customers and demanding value for their hard-earned money.
Robert B. Teague is a pulmonologist and business consultant who is based in Houston, Texas. E-mail him.
Read other blogs in this series.
