Here’s a very simple way to reduce healthcare costs: Make sure everyone involved knows the cost of whatever is being done before it is done.
For example, my 1-year old daughter had E. Coli recently. Actually, she still has it. It wasn’t a bad infection and she didn’t face serious health risks because she fought it pretty well. But she had residual diarrhea long enough that we took her to the doctor and submitted stool samples. It took a few days, but the results came back – E. Coli. Our daughter was in fine spirits, and other than very mild diarrhea you’d never guess she was even slightly ill. Even so Wisconsin law says she cannot go back to daycare until she has two negative stool samples.
It costs us about $30 a day for daycare, and every day she’s not in daycare it’s $30 to hold the daycare spot and a day’s wages. So, you’d think you’d want to test her stool every day to see if it was clear, right?
Maybe. My father came to visit and that really reduced the cost of having her at home. We also don’t know what each test is costing us. If they cost $1,500, and our insurance company covers 90% that’s $150 per test. Each set is two tests, and that equals 10 days of daycare. Given that it takes 4 days to get the results from each test, then it makes sense to wait for the results of each test before re-testing.
But what if the tests were only $50 each? Then it’s $10 for each set, and then it makes more sense to test more often.
So I thought I’d call my insurance company to find out what the test cost. They can’t tell me. They explain that they have special negotiated rates with each provider, and for that reason they cannot tell me what the test will cost. At all. Although, the guy did finally admit that it was rare to see a lab test over “a few hundred dollars.” Then we heard from the lab people that when we submit a sample that actually about 10 actual tests are preformed. Great! Now we don’t know whether a lab test is actually just a few hundred bucks, or a set of 10 or so tests at a few hundred each. Grrrr….
So I call the hospitals “Pricing Line”, which is supposed to be the place where you can find out what things cost. Well, if you wait a day or so for them to call you back you can. The gentleman explained that the base price for the test was in fact $190, but that insurance companies typically cover $125 to $150 of that. Hmmm…doesn’t seem like the 90% my insurance company told me, but it’s not hugely expensive relative to 4 days of daycare, so we go on testing.
But what struck me was how nobody really knew what this test would actually cost. The insurance company, hospital, doctors and nurses were all ignorant of what the charges would be. No wonder medical costs are spiraling. When nobody has any idea what things cost there’s no reason to control those costs.
What if there was a requirement that before any procedure or test would be conducted the patient and the doctor were made aware of the total charge and the out-of-pocket charge for the patient?