Smart Healthcare Shopping A Real Challenge

The Philadelphia Inquirer reports that even well-known health economists find it extremely difficult to obtain healthcare pricing information from hospitals - and the average American may not get a straight answer at all. Several journalists called around to various hospitals in the greater Philadelphia area and found that of the few hospitals that would respond at all, each quoted a price that was vastly different from the other hospital quotes for the same procedure. For example, a colonoscopy at one hospital cost $900, while another hospital charged $8,000.

Furthermore, the price quoted also varied depending on who was paying - each insurance company has its own secret contract pricing with each hospital, and these insurance company prices are different than charges for the uninsured. So an uninsured person might pay $3,000 for the colonoscopy, but someone else's insurer might pay the hospital $650 for the same procedure, while yet another person's insurer pays $1,025. Another layer of complexity relates to provider billing. In the current pricing system, the hospital has information about its own charges - but there are third-party providers affiliated with the hospital that may bill separately. For example, your family physician may come see you in the hospital, and then send you a bill that is completely separate from your hospital's bill.

The current Presidential administration, as well as the front-running nominees for the 2008 Presidential election, all support improving price transparency. If they succeed, you might soon be able to call your local hospital and find out how much they charge for a particular medical procedure in advance. Or, you might want to compare pricing among various hospitals in the area. This would make it easier for consumers to be smart healthcare shoppers. It may also encourage competition among hospitals and thereby lower pricing.