Health care: You'd better shop around

  • Article by: CHEN MAY YEE , Star Tribune
  • Updated: October 1, 2007 - 10:18 AM

A small number of early converts are starting to shop for health care, forcing some hospitals to drop prices and make other concessions to compete. And it's just the beginning.

Bob Braschler's search for cataract surgery was a real eye-opener. The Mayo Clinic wanted to charge him more than $20,000 for both eyes. Fairview Red Wing Medical Center quoted $18,000. Braschler finally settled on Minnesota Eye Consultants, which charged $10,000.

The baker from Red Wing, Minn., is just one example of how patients are shopping for medical care as they grapple with higher deductibles and co-insurance. A small but growing number of patients are calling multiple places to check prices before deciding where to go, something unheard of just a few years ago.

Hospitals are reacting in various ways. Most are adding staff to answer questions. They're trying to simplify pricing to make it less confusing. Some are even starting to drop prices to stay competitive.

It's no consumer revolution, but it may be the start of one.

Shopping for medical care "has grown and will continue to grow, as more of the burden of health care is put on consumers," said Doug Thorson, finance director at Children's Hospitals and Clinics of Minnesota.

Medical prices used to be trade secrets, jealously guarded by the hospitals and insurers that negotiated them. But with employers shifting more cost to employees, they have become everybody's business.

Price transparency

Now hospitals and insurers are tripping over one another to recite the new mantra of price transparency.

Park Nicollet Health Services cut prices across the board by 10 to 15 percent in the past four years, bringing them closer to the discounted rates insurers actually pay, Chief Financial Officer David Cooke said.

While just one of the four major insurers in Minnesota paid less as a result of the adjustment, it does mean that anyone checking Park Nicollet's website these days will find lower prices posted.

Similarly, Children's has reduced prices for MRI and CT scans by 10 to 30 percent after patients called to complain that they were finding lower prices elsewhere.

In addition, hospitals are looking for ways to untangle their Byzantine pricing, which is designed to make sense to insurers and not to patients.

Children's says that it plans to start charging a flat fee for common procedures such as tonsillectomies, instead of charging for time spent in the operating room.

The Twin Cities' biggest hospital group, Allina Hospitals and Clinics, is talking about bundling care for chronic conditions. For example, the hospital might offer one price for a year's worth of diabetic care.

For patients who have serious, expensive conditions, price is unlikely to be a big consideration. Most will continue to choose doctors based on reputation or quality, asking questions such as how many times a doctor has done a procedure. And for obvious reasons, shopping for health care has its natural limits.

"You don't want to start [treatment] and say, 'Oops, we found something else, Mr. Jones. Would you like to shop around?'" said Andy McCoy, vice president of revenue management at Fairview. "It's not like the brakes on your car."

Braschlers went shopping

Bob and Nancy Braschler own Braschler's Bakery and Coffee Shop in Red Wing, a pretty river town an hour's drive south of the Twin Cities.

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