What should help decide which hospital a person ‘chooses’?

[Greenbeard]

There was an article earlier this month that I found interesting, primarily because it gets at two of my favorite topics: health care and how people make decisions.

This one is about an incentive for choosing cheaper care providers some Mass. health plans are testing.

Why Even Cash Rewards May Not Turn Patients Into Health Care Shoppers

Employers have tried all kinds of strategies to get patients to act like more savvy consumers when it comes to health care. SmartShopper is among the latest. It’s a rewards program that pays $25 to $500 to patients who pick a lower-price test or procedure such as an MRI, colonoscopy or knee surgery.

When Hurley types her home address in Milton and hits search, she sees 14 hospitals ranked by price. Only two have green rewards buttons next to their names. The site tells Hurley that she will receive $50 if she gets a mammogram at Steward Norwood Hospital and $25 if she selects Beth Israel Deaconess Milton.

Hurley leans toward the latter. “It's in my hometown, I know right where it is,” Hurley says. “And I just have stronger brand-name recognition with Beth Israel.”

Still, Hurley says $25 might not be enough of an incentive. She has generous insurance and can have the test done at Dana Farber, a top cancer hospital, or at Massachusetts General Hospital, where she already goes for some care, for her usual $25 copay.

A mammogram at Dana Farber or Mass. General is four to five times more expensive than at Beth Israel Milton, which helps explain the reward. But Hurley’s sister had breast cancer, and she wants what she expects would be the best radiologist reading her test results.

We live in a world where different hospitals in the same general areas can have very different prices and very different cost structures. (We would continue to live in such a world even if the government took a more active role in price-setting, though the differences might be a bit less pronounced.) Which means there are systemic cost implications associated with where people choose to get their care. In the greater Boston area the most popular health system is also the priciest, which exacerbates the total health spending problem.

For the past several years there's been a great deal of attention in Mass to these inter-hospital price variations and lots of attention as to how much variation is "warranted" vs "unwarranted" and what to do about the latter (even the GOP governor has endorsed some form of price-setting and price caps to address this). The underlying assumption being that price variations between competing hospitals is a bad thing.

But in other markets price variation is acceptable. Holiday Inns and Hiltons can easily co-exist because in most sectors there's nothing particularly unusual about having different price points for the same service. The difference, of course, is that when choosing a hotel it's perfectly natural to let people vote with their feet based on relative price, whereas with hospitals 1) sometimes people literally can't make a choice at all due to their condition, 2) even when they can choose the relative price is hidden from them, and 3) there are ethical questions of whether everyone should have equal access to a Hilton (which sometimes manifests itself as the dream that all hospitals will be Hiltons at Holiday Inn price points).

I'm not so much interested in the first scenario (e.g. someone unconscious in an ambulance) but rather Ms. Hurley's scenario. When a decision is to be made, what system should be in place to guide it? How does the choice get made whether someone goes to a high-cost Hilton (Mass General) or a more affordable Holiday Inn (Beth Israel)?

We could just have someone (maybe the government, maybe a private payer) assign people the hospital they're supposed to go to when they need care. I can think of at least one real-world example of this situation.

Or we could try an inject financial incentives into the situation so that people feel the difference between differently priced hospitals, similar to how they feel the difference between actual Holiday Inns and Hiltons. This one is practiced today, but not as much as one might expect.

Or we could let people effectively choose when they select a health plan based on relative premium. Lower-premium plans tend to have smaller networks that cut out or otherwise restrict access to the highest-cost providers. Marketplace plans in particular are famous for this approach.

Or we could let anyone go anywhere at no cost to themselves. Sort of like making a rule that Holiday Inns and Hiltons both cost nothing to check into. Then the decision is made by getting in a line and how willing/able one is to wait. Some single-payer bills seems to envision this approach.

Maybe there's an option I'm missing--I'm open to hearing it!

What do you think?

 

[Rogue Valley]

I believe most health insurance carrier plans specify which hospitals are approved for maximum plan coverage.

The rest are considered "out-of-plan" facilities and are far more expensive in out of pocket costs.

For most people then freedom of hospital choice is an illusion, because there is a hefty premium price to pay for bucking the plan designated hospitals.

 

[Greenbeard]

I believe most health insurance plans specify which hospitals are approved for maximum plan coverage.

The rest are considered "out-of-plan" facilities and are far more expensive in out of pocket costs.

For most people then freedom of hospital choice is an illusion, because there is a hefty premium price to pay for bucking the plan designated hospitals.

Well, the question is how we should do it. Letting insurance networks decide is one way to go. Clearly, I exceeded the 5 minutes you get to make a poll so there isn't one here, but there are other options--namely the ones I mentioned in the OP.

It may be that bundling together and pricing a particular network of providers for consumers at the outset is the best way to do it. But there are other options.

 

[Rogue Valley]

Well, the question is how we should do it. Letting insurance networks decide is one way to go. Clearly, I exceeded the 5 minutes you get to make a poll so there isn't one here, but there are other options--namely the ones I mentioned in the OP.

It may be that bundling together and pricing a particular network of providers for consumers at the outset is the best way to do it. But there are other options.

With a choice, I myself would prefer a single payer system.

 

[Greenbeard]

With a choice, I myself would prefer a single payer system.

But that doesn't really answer the question. Single-payer rules out the network option, presumably.

But it's compatible with assignment to a hospital, financial incentives for different hospitals (i.e., pay more at the point of care to go to a more expensive hospital), and no cost differential between hospitals but queuing/wait times mediating access.

Which of those three should a single-payer system here be based on?

 

[HumblePi]

It would be logical that with the high price of health care that people should expect to receive that health care in state accredited hospitals that won't kill them while they're a patient there. That's sort of assumed, right? Well, I'm here to tell you that's not true. The state of many of our hospitals in the U.S. are sub-par and if you are scheduled for some type of invasive surgery, there's a possibility that you're going to get sicker as a patient.

I'm a nurse and I'm going to warn people, not try to scare, but make people aware that your choice of hospital for any type of surgery is more important that you realize. Short story....my husband went into a hospital for a femoral bypass. The surgery went well. Three days later, after his discharge from the hospital, his temperature was 105.(yes believe it) and he was barely responsive. I took him to a different hospital. It was a MRSA infection. Fast forward 4 months later and treatment with home intravenous therapy that I did at home with the help of a 24 hr. pump and a port inserted in his chest, he was finally free of the infection. He got lucky, it didn't go straight to his heart.

When you look into a hospital, do your homework, investigate them online and find out what the rate of infections are for that hospital. Each state publishes those statistics. When it came to my own surgery for a knee replacement, I made the choice to see a specialist and hospital that was an hour away from my area and only chose that doctor and hospital because of their patient reviews and state statistics on nosocomial (hospital acquired) infections.

At the prices people are paying for health care, they should at least expect that our hospitals aren't going to be a threat to their lives. But it's not like that. So, beware.

 

[Xelor]

... The difference, of course, is that when choosing a hotel it's perfectly natural to let people vote with their feet based on relative price, whereas with hospitals 1) ... can't make a choice..., 2) even when they can choose the relative price is hidden from them, and 3) there are ethical questions of whether everyone should have equal access to a Hilton (which sometimes manifests itself as the dream that all hospitals will be Hiltons at Holiday Inn price points).

...When a decision is to be made, what system should be in place to guide it? How does the choice get made whether someone goes to a high-cost Hilton (Mass General) or a more affordable Holiday Inn (Beth Israel)?

We could just have someone (maybe the government, maybe a private payer) assign people the hospital they're supposed to go to when they need care. I can think of at least one real-world example of this situation.

Or we could try an inject financial incentives into the situation so that people feel the difference between differently priced hospitals, similar to how they feel the difference between actual Holiday Inns and Hiltons. This one is practiced today, but not as much as one might expect.

Or we could let people effectively choose when they select a health plan based on relative premium. Lower-premium plans tend to have smaller networks that cut out or otherwise restrict access to the highest-cost providers. Marketplace plans in particular are famous for this approach.

Or we could let anyone go anywhere at no cost to themselves. Sort of like making a rule that Holiday Inns and Hiltons both cost nothing to check into. Then the decision is made by getting in a line and how willing/able one is to wait. Some single-payer bills seems to envision this approach.

Maybe there's an option I'm missing--I'm open to hearing it!

What do you think?

What you're getting at, albeit in a very roundabout way, is the fundamental market structure -- monopolistic competition (MC) or perfect competition (PC) -- wherein healthcare services are offered, hospital care being just one of them. PC's sellers are price takers, that is, the market determines what price they can charge, whereas MC's are price makers. Why the difference? Because under PC, the goods/services offered are undifferentiated.

In considering healthcare services, one must distinguish between services offered by specific professionals and those offered by an institution. The diagnosis and treatment one receives are doctors' services. The bed, EKG, EEG, CAT scan, x-rays, nursing, chemo treatments, hemodialysis, IV, blood tests, etc. are services a hospital provides. Whereas a doctor's services are differentiable, a hospital's aren't -- a CAT scan, say, is a CAT scan, no matter the hospital that performs it. Thus the only things distinguishing one hospital from another are capacity, procedures and scope of services it provides.

Even as hospitals offer "commodity" services, doctors, to some degree, may not -- a more experienced surgeon probably is a better doctor than a less experienced one. That said, doctors collaborate so less experienced ones get input from more senior ones, thus learning the "tricks of the trade." That difference is already accounted for by hospitals contracting most doctors rather than keeping them on staff, which is why one receives doctors' bills and hospital bills when one goes to the hospital for quasi-elective procedures.

So either one ascribes to the notion of hospitals as providers of substantively differentiated or undifferentiated services. Once one settles on that decision/preference, the rest falls in place.


Blue:
It's not hidden if one asks the hospital how much it charges.


Tan:
Whatever system one uses to shop for anything else: the "call and ask the price" system.


Teal:
What? Doctor(s) have privileges at a given set of hospitals. So unless one "flits" among the hospitals at which one's doctor has privileges, one isn't going to see much difference. For instance, my doctor has privileges at Hopkins (Baltimore) and GW (WDC). If I want to have a schedule-able procedure, I can go to either hospital. I wouldn't choose Hopkins unless there were a very compelling reason. I'm not going to choose Georgetown because my M.D. doesn't have privileges there. I care about who my doctor is, not at what hospital he has privileges.

Orange:
If one cares more about the hospital's fees than about who one's doctor is, one should:

• Contact hospitals and ask about their fees for various procedures and accommodations.
• When selecting one's doctor, find out at what hospitals s/he has privileges.
• Select a doctor who has privileges at the facility where one finds the pricing acceptable.

 

[Waddy]

My wife had direct experience in this area. As an administrator one of her jobs (for several years) was to find the best deal on major surgeries (usually transplants and other very high cost surgeries). She worked for a big union health plan. She had to weigh overall costs, the qualifications of the surgeons, the quality of the hospital, and a few other parameters. Often she could find a much better overall deal out of town, even if it meant putting the family up in a hotel for a while. So shopping around made a lot of sense, and saved a lot of money for the health program. I think people could, and would, do the same thing if they had ALL the information she had and had a financial stake in the decision.

In our state you can find out how many times the doctor has been sued, but not the details. You can find out if there were any disciplinary actions, but again, not all the details. You can't find out how many times he's been brought before the board, or any cases settled out of court. The health care system is NOT a transparent system, not by a LONG shot !!

BTW; that new young doctor who just took over your care might have spent his/her entire time in med school in mediation; but he/she is still a doctor. Good luck.