I'm one of the co-founders of Turquoise Health, mentioned in the article here. We've been downloading and parsing this data all day. It's a really big deal in the industry that the prices that insurance companies pay doctors are now being shared publicly. It will have all sorts of positive impacts over time, hopefully making rate negotiations more consistent and fair between different insurance plans. Right now, 10x differences in prices paid for the same healthcare service from the same doctor between insurance plans is not uncommon.
My dentist dropped my insurer (Delta Dental) because they claim they did not cover things as reliably as they should. When I saw a comparison bill of what it would be in and out of network for a recent service it looked like the 60% increase in price was purely because my dentist billed more, which they then claimed is due to the discount The insurer provides.
None of this makes sense to me. How can I leverage this new data access to my advantage?
People keep complaining government is too complicated and too expensive and bafoonish, yet they don't see how corporations are no different except their priority is maximizing profit not providing cost-efficient quality.
The point (in theory) is that in efficient markets you can choose between different companies offering a product/service and that competition drives down prices / costs. The healthcare market in the US is very much not a competitive market (in part due to transparency issues which this is trying to address, in part because of the perverse incentives in the health insurance system).
It's not so easy to have a competitive marketplace for government services (though I would not be surprised if the US saw the emergence of private police forces now, for those parents who actually want police officers that have a duty to protect their kids...)
But that doesn't happen in a free market because when money and power gets consolidated, monopolies and oligopolies can do whatever they want to dominate that market.
We have regulatory capture, legislation is written by think tanks like ALECS at the behest of corporations to benefit corporations thereby compounding the problem.
We need actual regulation or a reorganization of corporation ownership. Reorganizing corporations to be owned by the people who work for them rather than shareholders would shift incentives.
> When I saw a comparison bill of what it would be in and out of network for a recent service it looked like the 60% increase in price was purely because my dentist billed more, which they then claimed is due to the discount The insurer provides.
I appreciate what you all are doing. We need people to try and really fix our Healthcare Industry. However, I do have a question. Are you trying to get rid of Insurance mafia at all for at least some things like basic preventive care etc because I am sure that drives costs up a lot if Insurance companies are always between a doctor and a patient. I really hope something can be done where I can just go to a doctor/hospital, ask how much and pay for it out of pocket instead of crazy premiums and all the other BS we have to go through everytime.
> most preventive care is already fully covered at no cost to the patient.
Sigh. Someone has to pay and that someone is all of us.
Health insurance plays on the fallacy most individuals have that they will somehow beat the system and receive more services than they pay for.
So, it becomes a race to use as much as possible. Over prescribed meds for the sexy new illness you think you might have after seeing that commercial, unnecessary office visits, bloated testing.
Combine that with Drs who are scared shitless of being sued so they do whatever the patient wants, you have a the reasons for what we have today which is extreme over use of medical services. And that is precisely why insurance and care is so expensive.
I don't totally disagree with your broader point, but there's a decent case to be made that basic preventative care reduces costs by catching issues before they become expensive, chronic conditions (or worse.) The 'preventative care' that is 'free' is usually pretty basic: yearly physical, scheduled vaccines, and basic blood tests and cancer screenings at certain ages.
I'd also question what health insurance plans still encourage 'using as much as possible'. Most are high-deductible plans, where you are paying $100-$150 for an office visit until you hit your deductible or OOP max. The days of $20 copay doctor visits are gone for most of us, unless you are on Congress' health plan.
I don't agree that this is "precisely" why insurance and care is so expensive. Other countries do this just fine. The main reason that it's so expensive in the US is because we have for-profit insurance companies whos interests are diametrically opposed to the interests of the patient. They want to make as much money as possible, and patients want to pay as little as possible.
I have also been there and tried that, extensively. That's the opposite experience of what I encountered in paying by cash for more than a decade. Typically I'd pay around half price via cash for healthcare services (routine doctor visits, scans, et al.) versus what they charged if you had insurance. I never ran into a situation where they wouldn't negotiate steep discounts for paying by cash.
I can never get them to tell me what it would cost if insurance were to cover it. Either pay a definitive amount of cash today, or insurance will cover some unknown arbitrary portion of a similarly arbitray and unknown amount tomorrow, and pay the difference.
Yes, it works for routine stuff, but don't try to pay cash for abdominal surgery. You will get a very terrible, high price. After all, it's agree to our low price or die of appendicitis.
Not really. Its a matter of knowing where to find the place that can treat you.
For example, this surgery clinic will treat your appendicitis for less than the average patient's deductible + coinsurance. I'm including the flight + hotel stay in that estimate.
The problem is how you go about finding this information. Most ASC's and even independent doctors are extremely obtuse precisely to hide this huge liability from you. Hospitals will treat you like you are joking. Most hospital billing staff will prefer to do a cartwheel for you, instead of quoting you a price (insured or not). Or they will give you the super helpful range of 1,000 to...100k. Yes,I'm exaggerating to make the point. Heck, even if 1 out of 3 facilities do give you the estimate you seek, that's still 1 hour of time wasted for every 3 calls (avg call hold+time = 30mins) made.
For this reason, I recommend you go with a facility that is part of https://fmma.org/
Disclaimer: I don't have any relationship with OK Surgery or FMMA. Only a big fan, and also working with my startup to take out insurance out of regular healthcare choices.
1000 to 100k? How about zero to infinity? Hospital refuses to give any price range for a colonoscopy, wouldn't quote a cash price because I had insurance. Insurance can't say if it is covered. Won't know until the claim is submitted. Says it might be fully covered as preventative care, or partially covered, or not covered at all. Might not even go against the out of pocket max. Spent a week on the phone trying to get a straight answer. Final bill 3k.
"Its a matter of knowing where to find the place that can treat you." This is fine if you can plan in advance and have the funds to travel, but what if you can't? What if you're in a car accident, or have a heart attack? You can't shop around when your guts are spilling out on the asphalt.
> this surgery clinic will treat your appendicitis for less than the average patient's deductible + coinsurance. I'm including the flight + hotel stay in that estimate.
Are there really people flying to avoid overpaying for an appendectomy?
Boy, I had to have an appendectomy and I could barely stand. I can’t imagine flying for one, or holding off to get everything arranged. I suppose I may have had less time to plan than is implied here: went to bed fine, woke up in agony.
That has not been my experience in both Nevada and Arizona. I have paid cash for two child births, one was an emergency C-section, the other was planned. I was told costs up front and paid cash. I paid cash for a septoplasty and two tonsillectomies, all well under what I would have paid if I had self pay insurance..
This is provider-specific. Medical tourism exists, both internationally and within the USA. Some providers are happy to accept immediate cash and forego the pain of dealing with insurance company bureaucracy and delayed reimbursement.
Sorry, low effort post on my part: This is silly, so now we are expected to negotiate and haggle medical costs like we do at a car dealership? No thank you. Rather we all pay the same price, and if we have insurance, charge the insurance more.
I just wanted to clarify what OP meant by $Maximum. I'm not sure if that was intentional use of maximum or not, but it's pretty accurate and I'll explain why.
A couple of terms I need to define up front:
Provider = Anyone or anything rendering healthcare services.
Payor = We'll just define this as a health insurance company.
Charge Amount = This is the "sticker" price, many of you have heard of it. This is something defined by the provider, essentially all providers maintain a chargemaster which is a list of all services (procedure codes) and their respective charge amount (more on this later). Almost always they just have one chargemaster.
Allowed Amount = This is the negotiated price for a service between a provider and a payor.
So, say I'm getting a knee replacement at Man's 4th Best Hospital. The knee replacement is procedure code 27445. The hospital looks at their chargemaster and the charge amount is $10,000. If you want to self pay, they will often offer you a discount based on the charge amount. Often times around 80%, but it's very variable. Many people ask "well what would it be if I used my insurance so I can compare price". To which you get response of "we don't know, or we don't share that info, etc". Almost always they honestly don't know and it's actually really really hard for them to find out. I can talk about why this is so hard if there's interest.
Anyway, back to the example. A common myth is that the charge amount is just a made up number. This isn't really true, it is based on something. In virtually every contract there is a clause the insurance company puts in that says "we (the insurer) will pay the lessor of the charge amount and allowed amount". In other words if the allowed amount is less than the charge amount then the insurer pays the allowed amount, if the charge amount is less than the allowed amount then the insurer pays the charge amount.
So, we get our knee replacement at Man's 4th Best Hospital, the billing department submits a claim for procedure code 27445 and includes the charge amount of $10,000 on the claim. They send it off to Man's 4th Best Insurance Company. Side note, the claim would be much more complicated than this. Also happy to explain more about why that is if there is interest.
Now say the Hospital and the Insurance Company had negotiated an allowed amount of $5,000 for this procedure code. This means that Insurance Company will pay the Hospital $5,000. What if the billing department submitted the same claim with a charge amount of $4,000. Well then the Insurance Company would only pay them $4,000, it doesn't matter that they had in fact negotiated a higher rate of $5,000. So you can see how the burden is on the provider to ensure they submit the claim with a charge amount that is greater than the negotiated allowed amount otherwise they will get underpaid.
Alright, now back to OPs use of the word "$Maximum" for self pay. Remember how I said providers maintain one chargemaster. Because providers have many many contracts with many different payors, and across all these contracts the allowed amount can vary quite a bit, they need to set their charge amount as the highest allowed amount across all their negotiated contracts. If not they will sometimes get underpaid when submitting a claim. This is in large part what the charge amount is based on. It is the highest allowed amount across all their contracts with payors.
You may be thinking, hold up I thought you said they don't know what their negotiated allowed amounts are so how do they know how to set their charge amount at the highest allowed amount across all contracts. One way they can figure out the charge amount is by looking at how historical claims were paid out.
Okay okay sure, makes sense I guess, but why don't they just set the charge amount as $1,000,000 for everything. They could maybe, perhaps there's some rule against this, but regardless it wouldn't be very helpful. The chargemaster is a useful negotiating tool as it tells you your highest negotiated rate for a given procedure code. It's also useful for forecasting your financials. For example, you can look at last years claims for a given payor mix, and determine what percent of your chargemaster they paid out. Then you can use that to forecast revenue for next year. This is a really dumbed down example but I hope you get the idea.
So long story short you now understand the "why" behind the self pay cash price being a discount on their highest negotiated allowed amount, aka $Maximum as OP put it. That doesn't mean you're getting price gouged necessarily. Their chargemaster charge amount may be less than medicare rates if they have bad contracts (little negotiating power), or it could be super high if they have good contracts (lots of negotiating power).
My background is in the healthcare tech world on "both sides" (for providers and payors) for about 5 years doing analytics/data science/engineering stuff. I just mention this because as a long time lurker of hackernews anytime I see big healthcare threads like this I see a lot of questionable information that at least in my experience isn't accurate. There are some high ranked threads in this post that are not accurate in my opinion.
So all this to say, I empathize with OP's "/been there //tried that", it's a very frustrating experience. If there's one thing I've learned in my short time in the weeds of the US healthcare system, it's that the overwhelming majority of clinicians are honestly trying their best and are just as frustrated as patients (sometimes for different reasons but a lot of times the same reasons). The most exploitive behaviors are taking place multiple levels beyond the clinician you see at the clinic and are acting like puppeteers, where the puppets are clinicians and patients. The puppet strings are so long and so tangled that we can't even really tell what's causing all our anguish, so we just get upset at the only thing we can see.
You could but without insurance, you are taking a big risk. The point is that I cannot just buy insurance that covers catastrophic stuff. It is binary. Either I buy insurance (crazy premiums) and then I might as well use it everywhere or I don't. If I don't buy insurance, good luck.
The point is that Insurance should be offered for catastrophic issues with caps and out of pocket limits and premiums should be much lower because the insurance should not cover basic stuff and for those, we should use cash thereby have price transparency AND market competition b/w various providers.
We really need to move to reference based pricing. We can cut so much waste out of the current system including brokers. Reference based pricing also get rids of the loopholes for things like anesthesiologists being "out of network" at a hospital/facility that is "in network". It also gets rid of the situation where if you offer cash you get one price but if you submit for the same code, it could be 3x or 10x or even more.
Or we can have one network every doctor is in, and the state pays for everything. All doctors are independent contractors to the state. Everything is paid for. There's one price for everything. Everyone is covered. All this garbage just disappears.
Then there's one nice fee schedule like this, with all the prices on it, but it doesn't even matter, unless you're a physician doing your billing. [1]
[edit] As you can see from the PDF, a dermatology consult (A025) is $72CAD.
I suspect we could do decently by requiring insurance to purely reimburse the patient (possibly without the patient needing to pay first). If an insurer pays up to $1k for an MRI, and a hospital charges $15k but an outpatient imaging center charges $700, there will be a strong incentive for patients to stop using the hospital’s MRI.
Combining this with an auto-service requirement for a binding estimate before services are rendered would be amazing.
(Dealing with actual emergencies in this model may be hard.)
Which isn’t necessarily a problem because of insurance. If insurance reimburses $500, than that $700 MRI costs $200. If insurance reimbursed $800, then the $700 MRI is free. (Presumably the rules should be that providers may not discriminate on price except for genuine charity and that insurers must advertise the extent to which their coverage is sufficient for, say, the lower 40% percentile costs in the area.
The goal here is to remove incentives for various forms of corruption:
Providers (especially pharmaceutical companies) to charge outlandish amounts and then reimburse copays.
Providers to optimize pricing to extract money from insurers, when insurers have very little say as to where patients go.
Patients to simply not care what procedures cost at different places (right now, patients often can’t even find out).
Providers to invent charges after the fact. (If a patient gets a binding estimate in advance with a line item that makes so sense, the patient will argue. If a patient’s insurance is billed for nonsense, there may not be anyone paying attention who knows better.)
You don’t need to have the state pay. Make them charge the same price to all customers. Then you can have insurances compete. My body shop doesn’t charge one insurance $10/hr and another insurance $100/hr for the same work.
In my experience auto insurers assess damage and award $X for repairs. You can either go to their contracted body shop or pick your own. If you pick your own, they typically take the $X as payment.
So many don't realize that this is entirely because Medicaid pays less than the cost of treatment. So hospitals make it up by charging other customers more.
If you actually wanted this then your taxes would go up because Medicaid expenses go up dramatically.
Maybe it's worth it - but at least be aware of what you are asking for.
"So many don't realize that this is entirely because Medicaid pays less than the cost of treatment. So hospitals make it up by charging other customers more."
I would like see an accounting of that. I bet they charge way more than they have to if they want to make up for Medicaid.
I'd be interested in reading more about this. A lot of the cost of medicine is overhead interfacing with insurance providers and all the layers of profit therein, but I don't know exactly how much.
A regulatory body looks at how much something "should" cost based on its history of reimbursement and the cost of its inputs and then sets a cap of say, cost + 20%.
The problem is having an independent body that is free of influence of health insurance companies and hospitals, both of which have perverse incentives to continue profiteering.
Germany has reference pricing for their drugs system and doesn't seem to have a supply issue. Genuine question, is there something that makes you think that wouldn't be true for the US?
I was thinking more in terms of procedures. Look for waiting lists, those are the procedures where the government–chosen price is too low. Meanwhile more profitable procedures will not have a waiting list.
Medicines are more complicated because the manufacturer will probably have patents that grant them a manufacturing monopoly, meaning they can always set the price to whatever they want anyway. Not to mention that a multinational can afford to make less in some countries as long as on average they make enough to continue doing research. If Germany somehow sets a price that is egregiously low, the manufacturer can simply sell their medicine elsewhere instead.
" Genuine question, is there something that makes you think that wouldn't be true for the US?"
The US is too big, too diverse, too whatever else, blablabla for things that work perfectly anywhere else in the world. Nothing can be learned from other countries unless it makes capitalists richer.
The sibling is right but in this case we'd probably do something like Medicare + 20%, which is actually close to what most insurers do for some of the codes already. It just removes the cost of negotiation, brokers, out of network, etc. and actually lets you know the cost up front for most appointments. We also need to get rid of service levels for most appointments. It is just used as an excuse to up charge by having patients fill out pointless paperwork. We also need to reimagine our service provider models. We have already move to CMAs to take blood pressure, etc. We also need to move to PA or LPN instead of a Dr for most cases. Ear infections, colds, flus, etc. are a majority of family appointments and can be handled by lower levels. The Dr can then review cases and deal with the more complicated cases where her expertise is most needed.
The whole premise of a doctor visit is you don’t know what is going on and you need someone to differentiate everything that’s happened to you to figure out if it’s gas pain or cancer. When you see a Doctor, they are trained for years more than any mid-level provider and they carry massive legal risks if they are wrong or negligent. When you see a PA or LPN they have far less training, and are judged by “nurses standard”, so when they miss your child’s cancer, or kill you by administering the wrong dose, you don’t have repercussions.
In reality, the legal costs in healthcare should be the next big trim on the cutting block - a single judgment for the $100 million against a provider somewhere in South Carolina makes insurers raise malpractice rates for all doctors everyone by huge percentages. Those costs put doctors out of business and all of a sudden you have far less providers in many rural areas and people die of preventative stuff. The stress of dealing with malpractice is so high (60% of all doctors are sued for almost entirely frivolous reasons, every single year nowadays) that doctors are now directing their kids to become nurses - higher guaranteed pay, you don’t lose your 20s to medical training, and no stress of career ending lawsuits.
If you go to a hospital for a longer illness and have to be taken care of by team of rotating health professionals, every lawsuit can name every single professional, whether they have anything to do with your damage or were just on the note for admitting you to the hospital. All of those providers then have to pay 100k to a lawyer to defend themselves, even though it’s obvious to a kid, they shouldn’t have to.
I’ll admit I haven’t thought of all of the potential consequences, but this seemed like a good idea.
Medicare collects cost data from hospitals and uses it to set their DRG payments. They have the data.
You could make some law saying providers can’t charge more than X% of what Medicare rates are. You could even make it 200% (lots of room for higher reimbursement) and it would be a massive change. You won’t have one hospital charging $2000 for an MRI and another $15,000 (actual numbers I’ve seen - the payment insurers made!).
That would force hospitals and insurers to at least keep price somewhat closer to reality and they’d need to stop the game of “ill take an insurance payment below cost for X-rays but make it up in MRI reimbursment” which is what a lot of hospital do - they look at line of service finances not procedure costs (so they don’t care if X loses money if they make it up on Y).
Problem is, most hospitals have no clue what things cost (a friend worked at a major hospital and said they’ve never calculated what it costs, all in, for say an MRI).
It would be massively disruptive for a while but eventually contracts would be renegotiated and you’d end up with bills that are at least in the ballpark of actual costs.
> in this case we'd probably do something like Medicare + 20%, which is actually close to what most insurers do for some of the codes already.
But this is how Medicare sets its own prices - they pay a percentage of the minimum price you charge anybody else. You can't then have the non-Medicare parties charging a percentage of Medicare; that's a circular reference that could result in absolutely any price.
Non-American here: your healthcare system is so abysmal that you could stop short of implementing Medicare for all and still have a significantly improved system. You should obviously have Medicare for all, but let’s not kid ourselves about how far from that you are.
as european i am not entirely convinced that it makes sense to have hundreds of companies providing the same heavily regulated service.
if there were too few of those i would probably also object.
idk about the situation where there are no private companies involved at all and the government takes over healthcare top to bottom because on the one hand i see a massive problem with for profit healtcare as it is and on the other hand i can see how incentives would wither away if there is no drive for efficiency at all.
“Right now, 10x differences in prices paid for the same healthcare service from the same doctor between insurance plans is not uncommon.”
Makes me wonder how things got to this point. How can a business perform any planning if they sell their services with such big differences between prices charged to customers?
The honest answer is because that’s what insurer negotiation had led to with hospitals having using their negotiating position.
If you’re a hospital in an area with standalone MRI clinics the negotiation pressure is high, insurers can say “ill send patients elsewhere”, so you give on price, maybe below cost.
But that same hospital is the only cath lab in 100 miles. Great! We’ll just tell the insurer “we’re charging 300% the normal cost of a cath procedure, take it or leave it”. So the insurer takes it because how can you offer insurance and tell customer they have to drive 100 miles for a heart procedure?
Hospital is happy because they’re profitable overall. Insurer just lives with paying 3x for cath procedures in that area.
Over time the higher paying ones subsidize the lower ones. Due to this we'll see some people's insurance premiums increase, some decrease, and some insurance providers probably go out of business (all good IMO).
Our industry-focused products are based on knowing how much every service costs at every healthcare provider. It's the underpinning of our products.
We also post a lot of the rates publicly in a consumer-friendly searchable format, but we don't charge any money for that. But this data will let us greatly expand the scope of that free service.
Thanks! So far, so good. We don't sell anything to consumers. Our products are aimed at the healthcare industry which lets us post information for consumers for free and we have pretty good product-market fit.
Obligatory "if anyone is interested in joining a fast growing, series A company doing impactful work, hit up our careers page!"
Interesting, I'm curious since you're in the industry, why do you think medical tourism has never taken off in a big way in the U.S.? I feel like I saw more people willing to go to Poland or Ukraine for things like dental work when I lived in Europe than people in the U.S. willing to go to Mexico or some other destination.
The US is really, really large and many people living there have never left it. There's also a belief that US healthcare is the gold standard (which is probably true at the very high end, but not necessarily on average).
In other words, it's a hard sell to convince a factory worker to travel 5-10 hours on a plane to a place they have no familiarity with to get what they believe to be inferior treatment. They might not even have a passport.
This is much less of an issue in Europe where countries are tiny and almost everyone travels between them on a regular basis.
Also, medical tourism is mostly limited to what the industry calls Shoppable Services - outpatient treatments that are not emergent/not life threatening. There is a bit of a cottage industry in Mexico for some services, like bariatric surgery for obesity or dental work, but it isn't a huge volume. The really expensive stuff in the US is emergency treatment which you can't shop for anyway.
All that said, I think the interest in buying prescriptions from overseas has never been higher.
Anecdotally, most of the people in my circle of friends and family are perfectly satisfied with what we get locally. If you have adequate insurance and no major medical issues, you don't save much by flying down to Mexico. I do have some extended family that have gone to Mexico for treatment, however, mostly of the dental variety. But it was major reconstruction, so it was worth the effort.
I do remember reading a story a couple years back where an insurance company paid for their customer to fly to Mexico, flew down a US orthopedic surgeon, and paid him pretty well for his services. The cost of the flights, surgeon, and medical facility in Mexico were significantly less than it would cost them in the US, so everybody won except the US hospital. As I recall, the hospital in Mexico was collocated with a resort, so it was a nice place to recuperate as well.
Not sure how common that really is, though, stories like that make the news for a reason.
I want my medical providers to be local to me so they’re liable to my local community. I also want to keep my organs and have insurance cover the costs.
I was guessing it was this bit at the bottom of their landing page:
> Are you a transparent provider or payer?
> There is a market for transparency. Let patients find you by claiming
> your provider page and listing your services. It only takes 10 minutes.
But following through that link says it is a free program.
We build products that help healthcare providers and insurance companies broker contracts between themselves based on actual market information instead of guessing at prices. The goal is to drive down prices by making the market more efficient.
Part of that is assuming that prices will be public, so we encourage them to claim their own page and take control of the rates listed there.
How well will their data be audited and enforced? For example if they charge one price and yet their public data purports another price?
More so will they cut the drug prices internally and shift the difference onto an administration fee? That is one aspect I'm very mindful of.
That may be true but the first prerequisite for functioning markets is price transparency for participants. Without that it will never work. There may be other problems but you absolutely need to know prices.
I'd argue that it's a mathematical/logical truth in principle, and that the only thing that requires proof is whether this particular implementation is successful at what it aims to do.
This is a good question and the answer is absolutely yes.
It could raise prices. Consumers have some incentive to care how much they are spending on health care, but they aren't generally the claimant on savings they realize for their insurance plans. (Obviously the incentives for uninsured or self-insured patients (to the extent that there's anyone in the latter category) are quite different, but those populations are small.)
On the other hand, every hospital has a strong, strong incentive to care a lot about how much their competitors are getting for the same procedures. (Much more than consumers, for example.)
It's possible that these disclosures lead to prices falling as hospitals seek to undercut each other. However, most US hospital markets feature a small number of competing hospital systems in an oligopoly. The price-cutting pressures in such markets are much, much weaker. There is a "mutually assured destruction" aspect to price competition in such markets which may keep prices from falling.
The latter incentive can raise prices too. IF you know your competitors across town are getting an extra $5,000 for a knee replacement and you know that the two of you are the only game in town for hospitals, you may raise your prices rather than lowering them.
On balance I think this is the right policy, in part because I want this data myself as a researcher. But it is not unambiguous that this will lead to price reductions.
We're introducing more information into the market. If some prices went up as a result, isn't that an indication that the lack of pricing information was being used to artificially depress prices?
If so.. this isn't a "backfire" so much as an "obvious and necessary correction?"
Based off some of the other comments, here is the idea I’m picking up on:
If a particular market isn’t that competitive and has oligopolistic aspects, more transparency may increase the “effectiveness” of the oligopoly. Instead of hospitals that were charging more lowering prices to compete, we could see hospitals that were charging less raises prices because they know the competitive pressures are weak and they don’t want to leave money on the table.
Seems plausible to me, depending on how oligopolistic most hospital markets are.
The cynic in me thinks this is what you get when you have a very weak correlation between price to outcome, but the perception is that you have a very high correlation between price and outcome. Boards think paying more gets them more, but if it doesn't maybe that just means the price keeps going up as boards attempt to pay more for better outcomes.
I could see something similar happening in healthcare in select locations to some degree, if some hospitals continue to charge more for a specific procedure because the communities they are in are less price conscious and if there's not good information on outcomes to link to the cost. There are plenty of other products out there which cost a premium based on name alone, and there are quite a few very famous hospitals. Usually they are famous for expertise, but that doesn't mean their fame in one area won't lead people to believe they are equally as good or above average in others where they aren't, even if they charge more.
Medical care is not the kind of good that you can just say 'oh the market will correct it', because most of the assumptions you make about 'the market' don't apply to essential services.
Can you support that claim? I couldn't find when CEO pay went public but it sounds very likely like one of those causes were correlation definitely doesn't imply causation.
It makes sense to me. Transparency benefits the party that is more free to go elsewhere. Lots of companies, fewer good ceos, means that the ceos can leverage this better than the company can.
To put another way - at work, if you knew how much every employee made at work, it would probably be helpful in salary negotiations. Dont see why it would be different for ceos
