Annual Health Care Cost Trends Hearing


This past week, I was invited to participate in the Massachusetts Health Policy Commission’s Annual Health Care Cost Trends hearing. It is no secret that rising health care is a hot topic.  From personal, local, and state budgets to the national economy, paying for quality health care has emerged as one of the biggest conundrums of the 21st century.  Therefore, the Governor, Attorney General, Speaker of the House, and President of the Senate were all in attendance and spoke at length about how the Commonwealth can tackle this issue.

Thirty-one industry representatives, including 23 presidents of insurance companies and health care providers, economists, and other experts testified about inflation, consolidation, care-delivery innovation, value-based payment reform, price transparency, and purchaser incentives designed to promote value.

The two-day hearing was so educationally intense that when I arrived home, I was barely able to stay awake through dinner.

I may have been exhausted after hearing two days of testimony but I did walk away from the hearing impressed with the professionalism of the Commission staff, which coordinated the entire event, summarized all of the written testimony in three-ring binders, and provided Commissioners with a list of pertinent questions to ask expert panelists during their testimonies.

My first takeaway is that the health care industry is even more complex than I originally thought. Then I began to compare it to financial services, which also has a myriad of moving parts. Let’s face it: the health care and financial services industries probably have the greatest impact on our lives. Unfortunately, most people only have superficial knowledge about either industry.

There are probably a wide range of reasons for this, but I think it primarily boils bureaucracy, regulation, fragmentation and industry terminology.  It is certainly more fun for people to embrace jargon like points per reception (PPR) of the wide receiver on their fantasy football team than to try and understand finance terms like alpha, beta, alternatives, duration, secular or exogenous factors, and derivatives.  On the health care side, most people probably know a little about blood pressure and cholesterol, but can they decipher the differences among HMO’s, PPO’s, HDHP’s, and tiered vs Cadillac plans? Let’s not forget retirees, who have to trudge through the Medicare coverage alphabet, the donut hole, MAGI, and ten different Medigap policies.

Unfortunately, I could overload my hard drive with health care terms, and we haven’t even broached the impossible task of trying to figure out a medical bill – especially since most hospitals don’t tell patients how much they owe until after a procedure.  Of course, having access to pricing would help, but even if a patient has the opportunity to compare costs among multiple providers, how difficult would it be to make the choice between price and quality of care?

Let’s spend a little more time on pricing transparency.

When shopping for a car, buyers are not surprised when a compact economy car is significantly less expensive than a feature-loaded luxury vehicle. Unfortunately, this practice doesn’t transfer to the world of medical procedures, where the Pioneer Institute discovered that one health care provider can charge $700 for a left-knee MRI while a neighboring institution’s sticker price is $8,000 for the same service.

Some readers might be thinking: A doctor could provide some direction. This is unlikely, since doctors are often unaware of costs by institution related to various medical services.  Case in point: one of the Health Policy Commissioners was talking about what happened when he needed a colonoscopy.  Countless cost related inquiries to hospital representatives yielded few answers.  Eventually, he became so frustrated that he simply gave up and just had the procedure.

And he’s a physician!

Back to industry jargon.  At least in financial services, advisors have a fiduciary duty to guide investors through the complicated world of investing. This basically means that professionals have a legal responsibility to act in the best interest of the client. As far as I know, patients do not have the equivalent to guide them through the health-care maze, which ranges from choosing the right insurance policy, selecting a primary care physician (PCP), pricing out a procedure, and evaluating surgeons and hospitals for cost and quality.

My PCP is located – and all my past medical procedures have been performed – at one of Boston’s renowned teaching hospitals.  During the hearings, I learned that other hospital systems around the Boston Metro area could provide equivalent quality at a far more reasonable price. So, when the CEO of my provider testified, I seized the opportunity to have him clarify why there were such wide cost discrepancies between medical institutions, despite reports that there is relatively little difference in quality of care.

“Doctor, I have been a patient of your organization for practically my entire life. After two days of testimony from industry experts, insurance company CEOs, and hospital system CEOs, I’ve learned that your organization charges a premium for services while the quality is basically equivalent to the less expensive community hospitals in the area. Frankly, I am beginning to feel somewhat uncomfortable as a patient.  Can you help me validate my decision to exclusively use your facilities for medical services?”

He paused, looked me in the eye and said, “You have made a correct decision.”

I’ll admit, I was expecting much more from him.

Later in his testimony, he went on to say that he and his colleagues do not necessarily support how many industry experts assess the quality of services rendered by providers. This statement led to even more confusion. If the pros can’t agree on how to evaluate quality, how are we, as patients, supposed to know who offers high quality care at a reasonable price?

Personally, I’m not ready to leave my family’s current provider, which is consistently ranked in the top three nationally, unless industry pros can document a set of quality standards that I can easily interpret and use to make an informed decision.

The good news is that states like Massachusetts have established organizations, such as the Health Policy Commission, which will provide political leaders with independent research and analysis to help create guidelines and legislation to protect the public.  Make no mistake about it; much work needs to be done, but good first steps are to institute true price transparency and develop a solid education program to help consumers effectively navigate this complex system.