The drumbeat has a new tone, now the target for high health care costs is prices, not utilization or should I say overutilization or inappropriate utilization. Apparently if we all know the real price for a health care service we will … what will we do exactly? Oh yes, we will shop for a better deal.
Here’s the deal; there is no real price for health care. That’s because we don’t know how the various payments come together to generate real revenue and a fair return, whatever that may be.
If you are a doctor with an office, you are running a business and you have expenses; staff, overhead, insurance of various types, etc. and you need to generate an income after all these expenses so you must price your services accordingly. Now we can argue all day what that fair net income should be and it clearly varies by the required skill and training. An ob/gyn earns (after business expenses) between $200,000 to $300,000 depending on the practice setting and of course, geographic location (the Great Lakes region is the highest). Is that fair and reasonable? Frankly I think it is given the skill and training required, the cost of running a business and the required irregular hours. So what do you think?
You probably don’t care about that income number in any case. But at the urging of your employer or because of in and out-of-network concerns you may care about the individual price of a service. You can get a good idea of a fair price for a given service by checking the Health Care Bluebook, a data base showing the fair price for a service based on geographic area. Here is an example for the North Jersey area.
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We’ll only know what the fair price of healthcare is when doctor’s and hospital’s billing rates and what they accept become the same price. When I get explanation of benefit statement from the insurance company, I am always amazed at the “billing” price and what was paid. If everybody paid the same price that would be fair. To raise the billing price to the people who pay cash to cover all the people who don’t pay is wrong when the insurance company demand pennies on the dollar. I get that they raise their rates to cover their losses and cost, but what was the true cost to start with?
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Good point. We need collective fee negotiation so everyone pays the same, including Medicaid and Medicare.
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