Applying Free Market Values to Spine and Orthopaedics
by Dr. Richard Kube
In the previous issue, we provided an overview of free market values applied to spine and orthopedics. Now we expand upon these topics and dive into how you, the consumer, can unpack the black box of healthcare by better understanding price bundles, self-insurance, and hidden fees. We will highlight the importance of price transparency as it is the cornerstone of a free medical market, which empowers you as a consumer. Understanding price transparency will arm you with the questions that need asked in order to contain cost.
In Spine and Orthopaedics, many procedures are accompanied by hidden costs for additional persons and “unforeseeable events.” Therefore, a transparent price is critical. A business owner should know the full burden cost of an entire episode of care to plan for that financial burden. A typical procedure will utilize as much or more than a surgeon plus a surgical assistant, anesthesiologist, radiology services, pathology, lab, blood bank, neurologic monitoring, implants and disposables, and the facility charges. While one may be in network with the surgeon and the facility, these other line items can become expensive if not addressed up front.
As a self-insured business, you must ask about all of the factors associated with an episode of care, and whether they are covered or contracted in the rates provided. Contracting with only the facility can leave a lot of costs unaddressed. Many services are often provided by independent companies who do their own billing outside of the facility. As an example: the surgical assistant, when out of network or outside the facility contract can cost more than the actual surgeon. Therefore, it is important to demand transparency and to know your contract.
A possible solution is contracting with a provider/facility that charges a “bundled” rate. However, multiple providers include asterisks as part of their “all in” pricing. It is important to know what is behind those asterisks and what additional financial burden you may encounter after a service has been provided. There can be hidden costs with added service professionals or in the implants being used for the procedure. Ideally, you want to find someone who has no hidden fees. We use terms like “all in price” and total cost for the “entire episode of care.” There are no asterisks for any services provided at our site.
There will always be some variables such as a patient having a cardiac event or other emergency requiring a transfer to the hospital. At that point, cost is out of the control of the original facility and agreement. Therefore, ask what the transfer rate is for a facility. While one cannot completely predict which patient will have a medical emergency, you can know which facility is best at making such predictions and therefore has a very low transfer and readmission rate. Paying attention to and asking questions about details such as transfers and readmissions can diminish extra fees, making the procedure more cost effective and the financial burden more predictable.
Paying attention to and asking questions about details such as transfers and readmissions can diminish extra fees making the procedure more cost effective and the financial burden more predictable.
Another issue is the full burden cost of a disease. A more advanced concept is cost per quality adjusted life year (QALY). This speaks to the durability of a procedure. As an example, an epidural spine injection for pain might be cheaper, usually around $1000, versus excision of a ruptured disc, usually $9,000-$10,000. However, if multiple injections are needed, the total cost goes up as the patient may require the surgery in addition to the injections. That is not to say injections are never indicated, one just needs to be aware of all the variables associated with cost, so those costs can be controlled as much as possible. Finding a center that performs many of the services associated with a disease can be helpful. You want groups focused upon disease management who can offer comprehensive options. A patient is more likely to receive what is needed because all options are available. As the saying goes, if all you have is a hammer, everything looks like a nail.
Hopefully, these concepts have provided education and some questions to consider when reviewing that next contract. Know what you are paying to receive. That only happens when the seller is transparent about the product and its total cost. In the next issue, we will expand upon the more challenging concept of treatment outcomes touched upon above. You need to know what to look for in a medical service provider and how that equates into healthy and happy patients/employees with the ability to return to their lives long term.
No provider is perfect, and all will have complications, but some are more likely to achieve success than others. We will discuss how to find those successful providers and reap the added benefit of improved outcomes having greater durability with lower full burden cost, and hence, greater value to you.