Are Cost and Quality in Health Care Intrinsically Linked? Spoiler: Nope
You may find yourself reading the headlines about sky-high medical bills that are pushing people to the financial brink and find yourself wondering, does high quality health care require a high price tag? Likewise, does lower cost care mean that the care is worse? Let’s take a look at cost and quality in health care.
The push to remedy health care’s market failure
As we speak, CMS is pushing new mandates that will change the face of how health care operates. These new cost transparency mandates are a new force in an industry-wide push for creative “shopping” solutions that will help lower consumers’ health care costs. The hypothesis is that when consumers actively shop and exercise choice regarding their health care from a position of knowledge, “market pressures encourage providers to produce a more affordable, higher quality product or risk losing out to their competitors.”
But one of the major sticking points is this: How can a consumer act in their own best interest when they don’t know the cost of the service? And therein lies the failure – that the health care pricing model is flawed (and not “fair”) when it excludes the consideration of cost. It relies on our belief in the old adage—you get what you pay for. The belief that something more expensive is of higher quality—just because it’s more expensive!
Addressing health care’s market failure with shoppable services
For the most part, health care providers today aren’t beholden to offer competitive pricing because they aren’t subject to typical market forces. Their prices are completely obscured from their buyers. The goal with current mandate proposals and health care transparency trends is to remedy this by showing people what the costs of certain procedures deemed “shoppable” are.
But, what does that mean? Simply put, a shoppable service is one that people are able to plan for in advance, compare providers/facilities/locations, and make an informed choice. Oftentimes, these shoppable services can have wide price variations and can generally be viewed more as commodity products, rather than unique services. These shoppable scenarios certainly don’t comprise the majority of health care services, but they make up enough to make a big difference in driving down health care costs. Did you know that the price of the same MRI of the Head or Neck can vary from $212 to $3,619 in Seattle alone? Or that a regular preventive colonoscopy can range from $969 to $4192 in Philadelphia?
Making prices visible is just the first step
In the midst of this push for shoppable services and health care cost transparency (which are great things!), there remains a question in the backs of many people’s minds: Does choosing a lower-cost provider mean you’ll receive lower-quality care? Do the wide price variations I’ve highlighted above actually relate to anything regarding how great the MRI or colonoscopy was? The answer is no.
Education and awareness are critical to any transparency effort’s success so that people understand price variation. It will take a lot of adjustment for individuals to understand what several studies (including from HCCI and in the Annals of Internal Medicine) already show, that health care quality is largely unrelated to health care price. It’s a whole new world that today’s digital technologies will help with, but creating health care consumers doesn’t happen overnight – it will take a concerted effort.
Health care will always be personal
While price transparency will do great things for health care, we have to remember that all our efforts to promote shopping will fall on individuals with their own circumstances and preferences. Health care is very personal. We can’t know what factors play into the final value assessment for every individual. HealthSparq’s cost transparency and guidance solution helps members find pricing for quality in-network providers based on their unique preferences. Members can assess cost with other aspects that factor into their own value judgement—quality scores and recognitions, reviews, affiliations, training, languages, locations and gender, all provided within the HealthSparq One application.
HealthSparq’s mission is to help people make smarter health care choices. Helping a member go to a low-cost provider without sacrificing quality means everybody wins.