Dr Atul Gawande, Harvard surgeon and researcher, released a study on the financial process of a 12-hospital system involving surgical procedures.
The results were disturbing.
From the administrative data he studied, accounting for over 34,000 surgical discharges, he found that hospitals made significantly more money when there was a complication. This seems pretty intuitive, on the surface. Your surgery takes up a longer time frame and requires additional resources, you end up staying in a hospital room for a longer period of time, and your recovery in general is longer and more costly.
However, the actual amount of money that complications create for these systems, and hence cost the patients, is astounding.
A whopping $39,017 more is made per patient with a private insurance plan who had complications vs those who did not. For Medicare patients, the additional earning per patient is $1,749.
Dr Gawande identifies in his study that there are procedures available to avoid some of the complications involved that raise these prices, but hospital systems are slow to implement them. In fact, hospitals could LOSE money should they choose to avoid these complications.
Our founder and insurance expert, Chris Efthymiou, said it best:
“This is a great, to-the-point example of the crisis in America. Consumers need to have transparency, be responsible for the payment ‘scheme’ and also perhaps get to sit across the table from a hospital ‘charge master.’ Sounds like Wizard of Oz a bit, but this is healthcare.”
Transparency shouldn’t be a fairy tale, but luckily, the problem can be addressed at the employer level. Greater price and quality transparency, value-based plan design and bundled-pricing are all approaches that employers are using to fix these disincentives.
Here at Navinsure we’re all about pulling back the curtain and getting employers and employees alike informed on where their money is going and how to spend less of it. Hopefully we can get this mess sorted together: employers, employees, and their insurance experts.