How much does the average knee replacement surgery cost – $16,000, $31,000, $90,000? In some markets, it can be all of these. Thanks to medical monopolies across the country, merging hospitals have banded together in order to SUPPOSEDLY bring better care to their patients.
However, these mergers have resulted in skyrocketing health costs, and the quality may be no higher. The more hospitals merge, the less competition in a given area there is. With less and less competition, health care providers can charge insurers anything they want, which in turn, only hurts the patient. Instead of paying more for quality health care, patients and insurance companies pay for larger hospital systems.
The northern Utah market alone sees a cost variation between $5,500 and $11,000 dollars for knee surgery alone. Nearby states like Arizona has a varied market with differences in the Phoenix market over $18,000 while the Tucson market sits under a $5,500 difference. Las Vegas may also see a $5,000 to $11,000 difference in prices for the same surgery.
Additionally, the state of Utah has a very powerful “health care” system that has its own insurance company which does not contract with unaffiliated facilities — that often offer much better pricing. This health system also uses large across-the-board discounts on medical and surgical services to entice other insurers and third-party administrators to avoid contracting with providers that are not affiliated with that system.
There are a number of factors that come into play when you need surgery, including what your own insurance carrier is expected to pay at the local hospital (especially with deductibles being so high these days), prices at competing facilities, quality comparisons between facilities, and others such as facility location. One essential principle to remember is that high cost does not mean high quality.
Here is a short video that illustrates this very well.
Stand-alone Surgical Centers & Affordable Care
More and more, surgical facilities are making their prices for procedures easier to find. If you know where the cheapest gasoline in town is, why can’t you have the same information for something as important as orthopaedic surgery?
Thankfully there are options in the Southern Utah market for those in Utah, Arizona, California and Nevada for affordable, flat rate orthopaedic surgical treatment. Cedar Orthopaedic Surgery Center isn’t part of a medical monopoly. We publish our flat rates, so you know exactly what you’re paying for your next surgical treatment.
With a fully licensed staff and two state-of-the-art operating rooms, you don’t have to play medical monopoly with hospitals in your area and risk landing on Boardwalk. Our cash prices include everything from surgeon’s fee, facility fee, total joint implants, anesthesia fee and same-day physical therapy. With the state of medicine today, the highest prices certainly don’t mean the best care.
SALT LAKE CITY — Dr. Rick Henriksen doesn’t wear a white coat, and that’s not the only thing that’s unconventional about his practice of medicine.
Henriksen, a family physician in Salt Lake City, is embracing a new model of health care delivery, one in which doctors publish their prices online and scale back their reliance on health insurance companies for payment, or shun insurance altogether.
Instead of making a co-pay and allowing the doctor to file a claim to their insurance, patients at Henriksen’s new practice will pay a monthly fee that covers in-person visits, telemedicine and even house calls. People who don’t sign up for a membership can still get an appointment with Henriksen by choosing from his “a la carte” menu and paying with cash. He doesn’t take insurance.
About 250 miles away, in Cedar City, Utah, Dr. Randy Delcore does accept insurance, but his outpatient surgery clinic has begun to publish its prices online, an innovation that has drawn new patients from all over the country.
Both monthly memberships (also called direct primary care) and straightforward pricing are trends in a phenomenon called “price transparency,” which the Robert Wood Johnson Foundation said can ultimately lower the price of health care.
“The historical opacity of health care prices is widely believed to be a major factor inhibiting the more efficient functioning of the delivery system,” the foundation said in a policy statement last year. “Health economists and other experts are convinced that significant cost containment cannot occur without widespread and sustained transparency in provider prices.”
The Affordable Care Act was designed to make health care more affordable, but the average family premium has increased 58 percent since 2006, according to the Kaiser Family Foundation. Meanwhile, more than 4 in 10 Americans with insurance have high-deductible policies that may discourage them from getting health care. The move toward transparency could help these families by allowing them to find lower-cost providers and by shaking up health care delivery in other ways.
Not everyone agrees price transparency will lower overall health care costs. One physician argued in the Journal of the American Medical Association that transparency is not a “panacea,” noting that when patients are provided prices of different providers, some choose the highest-priced services to help them reach their deductibles.
Further, “it is not clear to what degree patients function as consumers in medical markets,” wrote Dr. Kevin G. Volpp, director of the Center for Health Incentives and Behavioral Economics at the University of Pennsylvania. In one study, only 10 percent of patients given access to a price-transparency tool used it to look up prices.
Other health policy analysts warn that the new models of medicine further fragment an already splintered system of health care and will worsen a shortage of primary care physicians.
However, those issues aren’t usually on the minds of people who need medical care and either don’t have insurance or have a deductible that makes their policy irrelevant. These people want to know how much an X-ray or bunion surgery costs and where the lowest-cost provider is, and the trend toward transparency is meeting their needs.
A walk in the park
Although his new practice, called Kestrel, doesn’t officially open until Sept. 18, Henriksen is already seeing patients who’ve signed up for the service. “You can almost think about it like a gym membership for your doctor,” said Henriksen, 38, a Utah native who went to medical school in New York and previously taught at the University of Utah School of Medicine.
Kestrel members can choose from three tiers of service for individuals or families. Prices range from $125 to $350 a month for family coverage and $75 to $200 per month for individuals. Henriksen expects most of his patients will be members, but he also offers clinic visits for $200 and house calls for $250.
The structure frees Henriksen from time-consuming paperwork and the need for staff; one study published in the Annals of Internal Medicine found that physicians spend two hours doing paperwork for every hour spent with patients.
For patients, direct primary care takes away a disincentive of the traditional model — paying for every visit — and allows them more time with a doctor who is more invested in their care, he said.
In a traditional clinic, Henriksen said he would care for 2,000 patients over the course of a year; at Kestrel, he will see no more than 400. And although he has an office in Salt Lake City, he anticipates doing a lot of house calls and telemedicine. He will also encourage patients to meet with him in nontraditional settings, such as a park.
“I want to remove the pain points of seeing a doctor. One of the biggest pain points is actually going to a doctor’s office and clinic. It’s not a fun place to go to. It takes time, you have to take time off work and it’s inconvenient. For me, it makes a lot of sense to see people in their own environment, where they’re comfortable.”
Henriksen said he also likes to see patients outside, which is easier to do with a direct primary care practice that isn’t driven by billing codes and a clock.
“We’ve become so accustomed to sterilized medicine. … There’s no reason you have to see someone in this sterile little room when you’re talking about their depression or insomnia,” he said. “It gets me outside, it gets them outside and you’re still able to get a lot of great stuff done.”
Changing the dynamic
When Dr. Randy Delcore began publishing prices at Cedar Orthopaedic Surgery Specialty Clinic in southern Utah, he discovered an unexpected benefit — people began calling from all over the U.S.
Because Delcore’s prices for joint replacement are cheaper than in other regions and in hospitals and he’s made them easy to see, some patients found it saves them money to travel to Utah to have procedures done, said Daron Pealock, a registered nurse and the office administrator of the clinic.
This amounts to domestic medical tourism, which is more practical — and sometimes safer — than international medical tourism, Pealock said. The surgical clinic has even devoted part of its website to promoting things visitors can do in Utah before or after their appointments, such as visiting Bryce Canyon or Zion national parks or attending the Utah Shakespeare Festival.
“And you have continuity of care, which is one of the most important things that we offer,” he said.
Pealock said some of the clinic’s patients have catastrophic or Christian cost-sharing policies and are paying out of pocket, so they are taking time to do research and find the best value and a doctor with whom they are comfortable.
“Back in the day, insurance was designed to be for catastrophic events; it wasn’t meant to treat your day-to-day issues,” Pealock said. “It’s evolved over the years to where it’s 360 care, which is good to a point, but because of business and insurance, people have gotten left behind a little bit.
“We’re a little more traditional. We’ve changed the dynamic a little, and people appreciate that. They are always surprised when I give them my cellphone number. That doesn’t happen anymore.”
Other factors to consider
The price-transparency movement, in many ways, is a return to the past, when physicians went to private homes to treat patients and left with payment that could be cash or two dozen eggs and a live chicken.
The return to old payment structures might be appealing to seniors, and direct primary care as Henriksen offers may be especially beneficial to older people with chronic conditions or those who have a hard time getting to a doctor.
But such innovations in health care are also driven by young people, who expect to make appointments for in-person visits online and feel comfortable seeing a doctor over a webcam. Millennials, in particular, are skeptical of an antiquated health care system in which costs are disparate and hidden.
“It’s hard for me to believe that those young people are going to grow into adults who find it acceptable, when they ask their provider how much something costs, for their provider to say ‘I don’t know’,” said Andrea Ducas, a program officer at the Robert Wood Johnson Foundation.
“In a culture of health, we want to make the healthy choice the easiest choice,” she added. “The choices we make depend on the choices we have. If we expect people to shoulder the burden of health care expenses, it’s unfair to not give them the information they need to make those decisions.”
Volpp, the Pennsylvania physician and economist who warns that price transparency is not a panacea, agrees — to a point.
“The medical profession exists to serve the needs of patients as customers, so it seems reasonable for those patients to have some idea of what procedures/services/tests will cost,” he said in an email. To only focus on cost, however, ignores other important factors, such as the skill of a physician, he said.
Moreover, “The benefits of price transparency in terms of making consumers more aware of significant variations in prices are more relevant in settings outside of primary care where expensive procedures or tests are more likely to be performed,” Volpp said.
Outside primary care, however, is where costs can begin to add up and become a problem for cost-conscious consumers who don’t have insurance. Health care memberships — whether in primary care or dental practices — don’t help when people need a specialist or hospitalization.
Doctors who operate “off the grid” have an ethical obligation to ensure that their patients understand this and to make sure their patients have, at minimum, a catastrophic-coverage policy, said Carolyn Long Engelhard, director of the Health Policy Program at the University of Virginia School of Medicine in Charlottesville, Virginia.
“Under the Affordable Care Act, which the physicians may hate and which we know has problems, poor, uninsured people who can’t get health insurance at their jobs can qualify for pretty large subsidies and get comprehensive insurance,” Engelhard said.
“Now, it may carry a fairly hefty deductible, but they will not go bankrupt if they have cancer or get in a horrible automobile accident. That’s the trade-off,” she said.
‘Nobody is trying to be obscure’
When paired with insurance, direct primary care can be beneficial to the patient and the doctor, but at a cost to society, Engelhard said.
When family doctors go from caring for 2,000 patients to seeing 600 in a year, “What are those other patients in the community doing? Where are they going?” she asked. “It exacerbates the shortage of primary care physicians. Yes, we have problems with primary care physicians and 10-minute visits, but this is not the answer,” she said.
Another problem, Engelhard said, is that when doctors opt out of insurance networks, including Medicare and Medicaid, they lose the layers of accountability that exist within the system and become accountable only to patients, who may lack the knowledge to assess the care they are receiving and are often reluctant to change providers even when outcomes are poor. “The ability to practice medicine without anyone asking about your outcomes is so 20th-century,” Engelhard said.
Further, when doctors act as small-business owners, “you’ve lost a little bit of the soul of medicine,” she said.
“I think we should all be working to have a system that serves all Americans rather than having a fragmented system that pulls out certain groups of people and separates them.”
For now, the new models are a niche of health care, and they may remain so, as long as the majority of Americans have health insurance.
According to the Kaiser Family Foundation, 49 percent of Americans have health insurance through their jobs, and about 34 percent have Medicaid or Medicare. About 9 percent have no insurance at all.
With more than three-quarters of Americans saying they live paycheck to paycheck, relatively few would be willing or able to pay for both health insurance and a direct primary care membership.
The number of Americans who have high-deductible policies, however, exceeds 40 percent and in most states is growing, which is one reason that price transparency is “an emerging area of practice and of interest to us,” said Dr. Ripley Hollister, a family medicine specialist in Colorado Springs and a board member of The Physicians Foundation, a nonprofit that advocates for high-quality, cost-efficient health care.
Physicians have been hamstrung by the prevailing model, in which they aren’t allowed to discuss what they are paid because of insurance and government regulations, he said.
“Speaking for physicians in general, nobody is trying to be obscure. It’s just that the whole process ends up being obscure and opaque. Our contracts are constantly changing. Someone says ‘I have Blue Cross Blue Shield’ and there are probably hundreds of Blue Cross Blue Shield contracts. Nobody has the ability to keep up with all of this on a daily basis,” Hollister said, adding that some of his contracts with insurance providers are 30 or more pages long.
“We’re seeing this as an emerging trend, but it’s applicable to a limited number of practices right now. We’ll see. Who knows where health care is going right now? We’re all waiting,” he said.