Healthcare's Biggest Lie: Employers Can't Do Anything About Massive Pricing Failure

Dave Chase | LinkedIn | December 11, 2015

The Antidote to the Bitter Pill

Astute observers have stated controlling healthcare costs is almost impossible. TIME magazine devoted their longest story in their history to this topic in The Bitter Pill by Steven Brill that was turned into a book. The solution to the problem that is outlined below addresses the massive pricing failure present in healthcare. That is, in most markets higher prices equates to higher quality. In healthcare, frequently the opposite is true. For example, it stands to reason that surgeons who do a procedure frequently are far more efficient and have far fewer complications than those who perform surgeries more infrequently.

The other dynamic that is created by the solution below is it shows how PPO networks are a quaint artifact of pricing failure. In a properly functioning market, there are transparent and fair prices and no need to create what amounts to a glorified Yellow Pages of healthcare organizations who've had a pricing table rammed down their throat. The healthcare organizations outlined are happy to provide a fair, transparent price that doesn't have to build in costs that don't add value to the care they deliver -- complex claims processing, co-payments, deductibles, patient accounts receivable and more.

Here’s the good news: Fortunately, #5 in the list of 7 Organizations That Will Turn Healthcare Upside Down In 2016 demonstrated the way to fix massive pricing failure. Before we delve into how they are doing what the experts have said is impossible, let’s drill down on Tulsa, Oklahoma as representative of most cities in America to see what is happening. We’ll look at the collateral damage from pricing failure, but we’ll also see that the highest quality surgeons do the most procedures and have the fewest complications resulting in the lowest prices. The “magic” is the need to create the market for those high value centers.