Price Variation in Healthcare is Killing US

Guest Blog By: Aaron Fausz and Terry Howell


In our book Healthcare is Killing US: The Power of Disruptive Innovation to Create a System that Cares More and Costs Less (available at www.HealthcareIsKillingUS.com), we show how prices for the same healthcare procedures vary across the US.

These are just a few comparisons:

  • Heart failure from $7,304 – $173,250
  • Total hip replacement from $11,100 – $105,000
  • Pneumonia (simple case) from $5,093 – $124,051
  • Appendectomy from $1,529 – $186,955
  • Knee replacement from $24,000 – $47,000
  • Endoscopy from $600 – $7,700

But the situation is even worse. Prices for the same procedure vary considerably within the same metropolitan area. Here are a few examples:

  • Lower join replacement in Dallas from $42,632 – $160,832
  • Lower join replacement in Washington, DC from $30,000 – $69,000
  • COPD in New York City from $7,044 – $99,690
  • Knee replacement in Miami from $27,115 – $44,237
  • Lower back MRI in San Francisco from $475 – $6,221
  • Pregnancy ultrasound in Cleveland from $183 – $522

This level of price variation is simply outrageous.

Thankfully, some organizations have decided to be more transparent. One example is the Surgery Center of Oklahoma (SCO), which lists prices for more than 200 outpatient procedures on its website—including everything from plastic surgery to a hip replacement. There is no bait and switch; the price you see is what they charge and it is generally much less than the average across the country. For example, the average cost across the United States for a Hysterectomy is $38,000. But the SCO performs the procedure for $8,000. And their safety/quality and clinical outcomes are as good as, if not better than, most hospitals.

If you had to pay for this procedure out of your own wallet and knew this price information, where would you choose to go?

They have a 32,535 square foot, state-of-the-art multi-specialty facility which is owned and operated by over fifty of the top surgeons and anesthesiologist in central Oklahoma. Business is booming because of the quality of what they do, because they listen closely to their customers, and because they tightly control the cost of every aspect of their business. This and the transparency of their website pricing attracts customers from all over the United States and Canada.

It is time for US as consumers to demand price transparency for every aspect of healthcare. It is time for US to start shopping around for our healthcare needs. If enough of US, including companies and state agencies, begin to demand to know what our care will cost, and shop around for the best value, the market will begin to work its magic on reducing the cost of healthcare. Yes, even healthcare. We as individuals and as a nation can ill afford not to.


Aaron holds a PhD in industrial and organizational psychology from the University of Tennessee in Knoxville, with a minor in industrial engineering. In addition to his latest book, he is also co-author of Leading Healthcare Improvement: A Personal and Organizational Journey. He has helped numerous organizations align and improve their personnel and business systems to accomplish strategic objectives and he has consulted with leading healthcare organizations all across the country. His areas of expertise and professional skills include guiding organizations through strategically driven changes and enhancing business performance, with significant experience in rapid cycle improvement, performance measurement, and behavioral change management. Aaron also has extensive experience in the implementation of technological solutions, as well as in executive coaching. Never interested in the status quo, for over a decade Aaron has pursued research and writing about disruptive innovation and how it can transform healthcare.

 

For over thirty years Terry has been learning and teaching ways to transform our sick care system into a compassionate healthcare system that is humble, respectful to all, patient-focused, constantly learning, affordable, accessible to everyone, and safe. His experience includes serving on the executive teams of two large hospitals where he helped install state of the art management systems. In addition to serving on these leadership teams, he worked at two nationally known healthcare consulting firms as president of one and senior principal of the other. He just recently started Skye Solutions, LLC focused primarily on disruptive innovation in healthcare. Terry is proud of the fact that he was able to provide content and teaching support at the founding of the Institute of Healthcare Improvement, lead the redesign and development of a nationally respected Lean Academy at Denver Healthcare, teach at the Tulane International Masters of Medical Management program and elsewhere, and serve on advisory boards of forward-thinking organizations. Terry’s tendency to constantly push the envelope of improvement explains his current research and writing about how disruptive innovation can transform healthcare institutions.

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One thought on “Price Variation in Healthcare is Killing US

  1. We have excellent, dedicated professionals in healthcare, some of the best in the world. Unfortunately, they are trapped in a broken system. Can the system be fixed, or is replacement the only option.

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