How Much is that Appendectomy in the Window?

Last Sunday, a Milwaukee Journal Sentinel article, “States Push for Hospital Price Lists,” described three state programs—in Massachusetts, New Hampshire, and Oregon—that require hospitals to disclose their prices. These directives are driven in part by the belief that consumers, armed with better and more information, can make educated decisions about their medical care.

In almost all other areas of the market economy, pricing transparency is ubiquitous for consumers. Not so in the healthcare arena. And in light of more and more Americans shouldering a greater burden for their healthcare expenses, do consumers deserve higher quality information—or any information at all—about hospital costs.

According to Kaiser Family Foundation research, High Deductible Health Plans (HDHP) currently make up two to three percent of the market. But those same HDHPs are expected to cover almost 40 million Americans by 2010. Enrollment statistics for HDHPs also defy conventional wisdom about the demographics that are utilizing these plans. Almost 60 percent are family plans and 30 percent of enrollees have annual incomes that do no exceed $50,000. The majority of participants are also over 40. So much for HDHPs as the province of the (necessarily) healthy, wealthy, and young.

I believe that state regulation will have the most material impact on how hospitals do business, from providing services to collecting accounts receivable. Healthcare reform may be paraded on the national stage, but individual states will be the site of true change, both for providers, consumers, and vendors in the ARM industry.

The three hospital pricing mandates noted in the Journal Sentinel article above beg several questions:

• Will hospital pricing transparency inform consumer choices?
• In the big-box store model of “rolling back the prices,” might hospitals’ concern about being seen as an “expensive place to shop” encourage competition in certain geographic markets enough to actually lower costs for consumers?
• Will disclosure of hospital prices help consumers better budget for medical expenses or elect lower cost alternatives that might keep them out of bad debt situations?
• And how might the potential to divert some consumers from delinquency status in the first place affect hospitals’ surging bad debt expenses and, subsequently, the market for ARM industry companies that service, purchase, and litigate healthcare accounts?

Healthcare creditors, ARM industry players, and casual readers and fans: weigh in on these issues. I’d like to hear from you.