Seeking the Best Medical Prices

By WALECIA KONRAD

Published: November 27, 2009

http://www.nytimes.com/2009/11/28/health/28patient.html?hpw

Comparison Shopping?• Health care consumers are encouraged to comparison-

shop on things like doctor’s fees and heart surgery rates. But unfortunately, most of us have little clear or useful information to go shopping with.

• “When you go to the doctor, how much you fork over when all is said and done is often just a mystery,” said Dr. Anthony P. Geraci, a Manhattan neurologist who is trying to buck that trend by posting his prices on his Web site.

• With the growing number of uninsured people, the increase in high-deductible insurance plans and big jumps in co-payments, just about everybody is paying more out of pocket for health care nowadays. An estimated 15 percent of adults younger than 65 now pay with their own money medical costs greater than 5 percent of their annual household income, according to the Center for Studying Health System Change, a nonpartisan research group in Washington.

Routine Exam?

• Katie Kyser, 30, the mother of a year-old daughter, lives north of Seattle. She and her husband, Jason, who works in construction, recently moved from California. They have no health insurance, so they pay all costs out of pocket.

• When Ms. Kyser needed a routine gynecological exam, she called a handful of local doctors, all of whom were charging $200 or more. “There’s no way we could pay that,” Ms. Kyser said. “I had to find another way.”

• Having seen an ad for PriceDoc.com, a new Web site that lists doctors throughout the country who are willing to post their prices and negotiate with patients, she decided to try it. Ms. Kyser found a nearby clinic where doctors charged only $75 for the exam.

Medical Pricing a Quagmire

• Medical pricing is a quagmire, oozing with jargon and current procedural terminology codes. Just look, if you dare, at your latest “explanation of benefits” from your insurer.

• What’s more, rarely is there one standard price for a medical treatment. Prices vary based on geography and type of provider — whether hospital, stand-alone clinic or any alternative.

• Then, doctors, hospitals and other providers may negotiate different rates with different insurers. It is not unusual for a provider to have 10 or more different prices for the same procedure, depending on who is paying. Providers often charge a completely different rate for people paying on their own, which is almost always much more expensive than the discounted rate that insurers pay.

The Economics

• What gives a firm market power?– Lack of a substitute!

• Market price is related to the elasticity of demand.

• What happens to quantity if you raise price?

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