Avoiding Healthcare Cost With Pricing Transparency Hype

Apr 22 2014, 4:07am CDT | by

No less than two reports were published last week which fall loosely under the banner of healthcare pricing transparency.

The first was Medscape’s Physician Compensation Report for 2014 (here). The annual Medscape report is based on a survey of over 24,000 physicians in 25 specialties around a broad range of compensation issues – including satisfaction.

Medscape’s findings (with data from 2013) is marginally more insightful than the Medicare Data dump from 2 weeks ago (here). One of glaring inadequacies of the Medicare data (for 2012) is the simple fact that revenue isn’t compensation. Seeing an annual summary of what Medicare paid to individual providers has almost no patient use.

According to the Medscape report (slides here) there weren’t many big swings in compensation (there rarely are), but there’s always a few noteworthy shifts. No less than 19 of the 25 different practice areas saw an increase in compensation from the previous year, 1 was neutral and 5 saw a decrease. Of the decreases, only 1 (nephrology) saw an 8% decline in compensation. Three of the remaining 4 saw a 2% decline.

Overall satisfaction was near or above 50% for most of the specialties across 4 categories (Overall, Income, Career and Specialty). The two noteworthy exceptions were Family & Internal Medicine with 32% and 27% (respectively for choice of specialty) even though they appeared to be relatively satisfied (50% & 46%) with their income. Other findings as quoted from the slide notes:

  • Those who perform procedures have the highest incomes compared with those who manage chronic illnesses. Earnings are for full-time work only. They include salary, bonus, and profit-sharing contributions. They do not include non-patient-related earnings.
  • In this year’s Medscape report, the perception of being fairly compensated does not correlate to actual compensation for many physicians. Orthopedists were the most highly paid physicians, but they fell below the middle of this list, with only 45% believing that they are fairly compensated. And although plastic surgeons were seventh among the top earners, at 37% they were the least likely of all physicians to believe that they are fairly paid.
  • When comparing newer payment models with survey results from 2011, there has been a dramatic rise in physicians choosing ACOs, with 24% of all physicians now employed in these organizations vs only 3% in 2011. Furthermore, 10% are planning on joining this year. In spite of considerable publicity, cash-only and concierge practices are still not significant payment models.
  • 5% of employed and 15% of self-employed physicians said that they will not take new Medicare or Medicaid patients.
  • Although Medicare is known to have lowered fees, private insurers are also paying less, particularly to small practices without any strong influence. Robert Morrow, MD, a family doctor in the Bronx and a Medscape advisor, said he now receives $82 from Medicare for an office visit but only about $45 from commercial insurers.
  • About 72% of respondents to this survey regularly or occasionally discuss the cost of treatment with patients. This has gone up from 68% in 2012.
  • 35% of employed physicians spend at least 10 hours a week on paperwork compared with 26% of the self-employed.

The second report – Price Transparency in Health Care (PDF here) – was from the Healthcare Financial Management Association (HFMA). For those unfamiliar with HFMA, their website (here) describes the organization this way:

HFMA is the nation’s leading membership organization for healthcare financial management executives and leaders. More than 40,000 members-ranging from CFOs to controllers to accountants-consider HFMA a respected thought leader on top trends and issues facing the healthcare industry. 

In fairness, they specifically indicate that the “primary audience for this report is industry stakeholders in provider, payer, and purchaser settings that this report calls upon to take specific actions to increase the transparency of healthcare prices” (ie: not consumers or patients).

The conclusion from HFMA’s 20-page report is simply this:

The lack of price transparency in health care threatens to erode public trust in our healthcare system, but this erosion can be stopped. Patients are assuming greater financial responsibility for their healthcare needs and in turn need the information that will allow them to make informed healthcare decisions. Price is not the only information needed to make these decisions; as this report has noted, price must be presented in the context of other relevant information on the quality of care. But it is an essential component. The time for price transparency in health care is now.

I have grave doubts about stopping the erosion of public trust. Two of the seven headings are “Guiding Principles for Price Transparency” and “Recommendations for Price Transparency Frameworks.” In effect, it’s basically another industry “call to action.”

Sadly, the value of any of this “transparency” is truly marginal – either in terms of our own actions – or in terms of the impact on our National Healthcare Expenditure (NHE). The Centers for Medicare and Medicaid (CMS) forecasts our NHE to be $3.1 trillion this year. In fact, our NHE as forecasted by CMS (Table 1 page 5 here) looks like this through 2022 (both with and without Obamacare).

All of which makes this kind of transparency similar to rubbernecking a freeway accident. There’s a brief moment of anxiety and tension and then everyone speeds on their way. Assuming data accuracy, releasing any healthcare pricing is a hollow objective because there’s almost nothing anyone can do with it. We simply have no way to influence it – either individually or collectively – and absent quality (or clinical outcomes), there’s no way to equate any value. We might as well use random number generators.

The one thing it always does, however, is to highlight how much our healthcare system is optimized around revenue and profits. Maybe someday this will translate into a debate about real healthcare reform – the one we continually avoid (cough – SGR / “doc fix” – cough). That debate isn’t called transparent anything. Its called healthcare cost.

 
 

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