Steven Sonenreich, chief executive of Mount Sinai Medical Center in Miami Beach, isn’t afraid of controversy. As the Miami Herald reported, this month he announced on a radio talk show that the hospital will start publishing what it charges insurers for procedures. “We will post our prices relative to Blue Cross, and Aetna, our contractual prices,” said Sonenreich, during an appearance on WLRN 91.3-FM. He challenged other hospitals to do the same.
A hospital competing on price? That’s virtually unheard of. And the impact is likely to be felt nationally. The South Florida hospital chief is shining a bright light on the fee-for-service system that’s largely responsible for inflating health-care costs in the U.S.
Under the current system, hospital can pretty much charge whatever they choose. In early May, the Centers for Medicare and Medicaid Services released data from more then 3,000 hospitals that accept government-insured elderly patients showing radically different prices for a variety of procedures. One example: As Bloomberg News reported, the average price of treatment for a hip fracture at Lenox Hill Hospital in Manhattan was $38,588; a mere 15 miles away at Coney Island Hospital in Brooklyn, the average price was $13,137.
Hospitals have been able to get away with such wildly divergent pricing because most patients haven’t been responsible for paying the full charges. Their insurance companies covered most or all of the bills.
This is changing now that health care is becoming less affordable. Insurance companies are moving away from co-pays and requiring consumers to pay a percent of their health-care costs. Companies are also offering employees high-deductible insurance plans requiring them to pay more of their health-care bills out of pocket before the coverage kicks in. People with this kind of insurance are likely to be far more price conscious than they were under their old plans.
All of this would seem to suggest that Sonenreich is shrewd to offer patients more transparency. His competitors already appear to be squirming. Brian Keeley, CEO of Baptist Health South Florida, was on WLRN the same day. He didn’t say he would follow Sonenreich’s lead. But it may only be a matter of time before hospitals start becoming more competitive on price. “That’s where the whole industry is going,” Keeley conceded.