Jeff Rice sees health care’s push into greater price transparency and consumerism of the last decade as beginning to move to the next stage. Ten years ago, Rice formed the Nashville, Tenn.-based Healthcare Bluebook to allow users to shop and compare prices for diagnostic tests and elective medical procedures, which can vary widely even within the same market. Healthcare Bluebook contracts with 5,000 employers with more than 3 million employees who mostly self-fund their health coverage. Many health plans, such as Grand Rapids-based Priority Health, offer web-based platforms for members to look up prices and get an estimate on what they might pay based on their insurance coverage. Rice spoke as part of Advantage Benefits Group’s recent annual health benefit seminar in Grand Rapids, and afterward talked with MiBiz.
What’s the state of the movement for price transparency in the American health care industry?
Really evolving and raising the bar. Transparency 1.0 was just put information out there and hope most patients would do it. What we found is a lot of patients do it, and another part of the population won’t do it. They’re just not comfortable or familiar with it. So now it’s about raising the bar and saying, ‘Let’s make it easier for them and let’s give them the resources so they have someone to hold their hand through the process,’ if you will, and really make it comfortable for them to get that education and make a different decision.
Research shows the percentage of people going online to shop for the best pricing in health care remains in the single digits. Why is that rate so low?
People say, ‘Well, you know, only 5 percent of people shop for care.’ But you have to realize 80 percent of people are healthy and they don’t need to shop for care. So it’s the denominator. If only 20 percent of employees are ill and 5 percent are shopping for care, it’s really a quarter of the people that are getting services are shopping for care. So that’s one factor where you have to think about it a little differently because most of your employees are healthy.
If you shop for a car, you go online and look around, but if you’re not buying a car, you’re not looking. Most people in that audience are not going to price shop for cars today, but if they were buying a car, they would. The other thing is they don’t know they can.
What prevents people from looking up prices?
Two big things. One is the economic incentives. What we know is 100 percent true is that if someone doesn’t have insurance, they absolutely shop for care all of the time, but if someone else is paying the bill, they don’t always have an incentive to shop for care. The other thing is just education and understanding. A lot of people don’t know that they can shop for care. When I put the slide up (during the Advantage Benefits seminar) with the in-network pricing variation, I was watching the audience and they were like, ‘Oh, wow.’ That was a surprise. It shouldn’t be a surprise because a lot of benefit managers, we should know this, but a lot of people don’t. Certainly a lot of patients don’t know.
What’s a misunderstanding out there?
Patients think, ‘Oh, I just go in-network and I got a great deal.’ They don’t know that there’s a ten-fold price difference within the network. A hundred bucks for an ultrasound or a thousand? It’s a big difference.
Where do you see that usage rate going in the next few years?
It’s been going up every year since I’ve been doing this. We started (in 2009) at about 1 percent and the industry averages are getting closer to 5 percent. Our own experience at Bluebook can get to 10 to 15 percent. So it’s definitely going up and the younger generation embraces it way more. As they get older and start having health care issues, they’re online.
What should an employer do to encourage employees to shop for the best price and quality in health care?
Smart benefit designs and really good education and communication about how their benefits work and how pricing and quality work. And it sounds simple, and it is simple, and we have the data from our clients that says, ‘That works.’ You can see double and triple the utilization (of price transparency tools) if you communicate well to your employees.
Why do we see such wide variations in some markets in prices for health care?
The best data around that is a Massachusetts attorney general report that studied this and has done a couple of updates. The number one reason for price variation is market leverage — big health systems commanding higher prices. What it does not correlate with is charity work, cost of living indices, Medicare percentage, or ‘my patients are sicker.’ None of those things played a factor in high prices. The number one variable for high prices is market leverage.
Interview conducted and condensed by Mark Sanchez.