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How Much Is That Brain Scan?


If turning Americans into price-conscious health-care shoppers is ever going to work, it will require wholesale changes in many of the industry's most basic business practices. Today, even the most routine information that patients need to make smart purchasing decisions isn't readily available -- or simply doesn't exist. Insurance companies leading the way on consumer-driven plans such as health savings accounts (HSAs) are attempting to fill the gap with piecemeal data that they compile themselves. But it's a vast undertaking.

Take pricing. At many hospitals, the cost of a procedure is either unavailable or just plain indecipherable. Hospitals maintain that their voluminous fee schedules, called chargemasters, are tantamount to trade secrets and have fought to keep them out of the public eye. After an outcry over the high fees that some hospitals charge the uninsured, California this year began requiring hospitals to publish their prices. Other states are expected to follow suit.

But what might seem like a victory for consumer empowerment is really just a small first step. Why? Because individuals don't gain much even if they do get their hands on a hospital's master price list. Chargemasters typically show every procedure in excruciating detail. But the biggest consumers of hospital care -- insurance companies -- negotiate deep discounts that providers don't offer directly to the public. A hospital might charge an insurer a flat rate for heart surgery, which includes everything from drugs and X-rays to the surgeon's time. But even some insurers administering HSAs haven't decided whether they will release such sensitive data to HSA enrollees. "Health care is the only commercial venture in America where people can't get information about what a procedure is going to cost them," says California State Assembly Majority Leader Dario Frommer.

Comparing quality is an even bigger problem. Few people check a hospital's infection rate before deciding where to go for surgery. But even if they want to, such information can be misleading. A high hospital mortality rate might reflect substandard care or simply a busy emergency room. "There's a lot of controversy about how to adjust for hospitals that treat patients who are sicker than others," says Stephen Jencks, head of quality coordination at the Centers for Medicare & Medicaid Services, which began collecting quality data this year.

As traditional insurance companies and providers grudgingly adapt to this changing world, newcomers are bypassing the old system altogether with direct-to-consumer marketing that promises not only care but also convenience, price, and peace of mind. MinuteClinic Inc.'s tiny express clinics, for example, promise no waiting to visit a nurse in the local Target (TGT) store. Patients can drop in seven days a week and choose from a menu of treatments for common ailments such as strep throat or pink eye. A 15-minute visit usually costs less than $50 -- less than a doctor visit. If there's a line, patients can take a beeper and shop while they wait. The Minneapolis-based company says 85% of its patients come for the convenience. "For common illnesses, there's no reason to wait for an appointment or to drive a long distance," says MinuteClinic's chief executive officer, Linda Hall Whitman.

So get ready for the shakeup in health care -- but don't expect a true free market to materialize any time soon.

By Lorraine Woellert in Washington


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