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Wednesday, February 4, 2015

Shopping for medical procedures

The list price of my treatments for prostate cancer in 2006-07 was roughly $130,000. Only after I had seen all the paperwork between my insurance company and the healthcare providers could I calculate the total in retrospect. I learned that surgery for prostate cancer costs much less than external radiation. The question of whether to treat prostate cancer with surgery or radiation is complex and controversial — I had to have both — but during all the discussions with providers, no one mentioned the comparative costs.

Blue Cross Blue Shield of North Carolina made news last week by announcing the public availability of a database of treatment costs, itemized by provider. What you see is not list price, but the BCBSNC negotiated rates applied to hundreds or thousands of treatment events. This is wonderful stuff. Why it took until 2015 to make it available is a valid question, but at least it's here now.

Bottom-up pressure from consumers to control big-ticket healthcare costs has been generally missing from the marketplace. Without such pressure, it's very difficult for insurance companies, employers, and governments to control costs top-down. Clearly, co-pays aren't an effective way to limit expenditures in the absence of foreknowledge.

BCBSNC also published a graphic last year to explain where each dollar of health insurance premium goes. Hospitals get one-third and physicians get one-third. Pharmaceuticals comprise half of what's left. Claims processing has become so efficient that on the insurer's side of the equation, it's not a significant expense anymore. Nor is the BCBSNC profit. I wish we could see a similar breakdown from hospitals and physicians, but the data is difficult to come by even for public hospitals. Private hospitals and private physician practices don't have to report their aggregated costs. Perhaps they should have to.

And if you're thinking that the lowest-priced provider cannot be any good, think again. BCBSNC says the surgeon who removed my gall bladder two years ago is the lowest-priced surgeon in town for that procedure. He did great. He specializes in gall bladders, just like the guy who took out my sons' wisdom teeth specializes in that. Besides, statistics show that the more often a surgeon does a particular procedure, the more likely a good outcome is.