How Opaque Healthcare Pricing Mechanisms Rip Off Consumers

‘I’ve been pounding the table about location-based pricing for years. Now we have hard data.’
Wolf here: Michael Gorback, M. D., who has authored a number of articles for Wolf Street on how opaque pricing in the US healthcare system inflates costs, has been a strong advocate of price transparency. He told me he is ‘one of the very few (only?) pain specialists who accept uninsured patients and publish their cash fee schedule.’
A ‘cash fee schedule’ is essentially a price list. It’s the norm in just about every industry, except in healthcare, where opaque pricing dominates – to the detriment of consumers.
By Michael Gorback, M. D., at the Center for Pain Relief in Houston, TX: Imagine you’re out shopping for a new car. You stop by Dealership A and get an offer of $35,000. You decide to do some comparison-shopping and head over to Dealership B. Their price is $39,000. You show them the offer from Dealership A. The trusty salesman says you should buy the car from him at the higher price because his store has a higher overhead. ‘Look at the fancy furniture in our showroom,’ he says. ‘The chairs are really comfortable in the waiting area and we offer espresso and cappuccino. Our rent is also much higher.’
This is the logic behind higher prices for outpatient procedures done at a hospital as opposed to an ambulatory surgery center or office setting. I discussed this phenomenon on Wolf Street back in 2014.

This post was published at Wolf Street on Dec 25, 2017.