Journalist Brill: Health care prices are too high
North Haven — Journalist Steven Brill spent months researching the nation’s health care system for his widely read Time magazine article, “Bitter pill: Why medical bills are killing us.”
His primary diagnosis: “All the prices are too high.”
“And everybody — with the exception of doctors and nurses — hospital administrators, CT scan equipment salesmen, hospital CFOs, drug company executives, everybody except for the people actually providing the care is just making way too much money, and that’s why we’re paying too much,” Brill said Monday.
He spoke at Quinnipiac University’s North Haven campus as part of a panel on health care costs presented by the Universal Health Care Foundation of Connecticut. The group, which pushed for years for a public insurance option in the state, has turned its focus to addressing the high cost of health care.
The speakers agreed that costs are too high, if not on who’s responsible or the ways to combat the problems.
Griffin Health Services Corp. President and CEO Patrick Charmel took issue with how hospitals were portrayed in Brill’s article, but said the piece raised “a number of important issues.” The article scrutinized hospitals’ profit margins and executive compensation, as well as those of the pharmaceutical and medical device industries.
“Clearly the cost of health care has become unaffordable, and for the nation, it’s unsustainable,” said Charmel, whose organization includes Griffin Hospital in Derby.
Charmel pointed to what he called “the perverse incentives that plague the system,” which generally pays health care providers for doing more.
There are multiple efforts under way to change that, many centered on trying to pay health care providers to coordinate patient care or tying patient outcomes or the cost of care into provider pay.
But there are other changes afoot in the industry, including the consolidation of health care providers as hospitals align to form larger systems and physicians join hospital networks or larger physician groups. Brill has pointed out that those changes raise the providers’ clout in negotiating prices with insurance companies, potentially raising prices.
State Comptroller Kevin Lembo, whose office oversees the health plan that covers about 200,000 state employees and retirees and their families, said changes happening in the care delivery system make him uneasy.
“I feel in some ways like we are once again behind this major shift in the marketplace, trying to figure out how to get out,” he said.
Show us the prices
A frequently discussed solution was transparency, making consumers more aware of the cost of health care.
“Let’s face it, all of us are insulated from the cost of care, and we’re not making true value decisions,” Charmel said. He noted that people with insurance typically have little incentive to find the lowest-cost care because they usually pay a fixed amount — a $500 copay for a hospital stay, for example — regardless of whether they choose a high- or low-cost hospital. It might be different if they were charged more for going to higher-cost facilities, he said.
And patients with insurance pay rates negotiated by their carriers, not what hospitals or doctors charge.
People without insurance or who get care not covered by their insurance, by contrast, often face bills that are far higher than what insurers would pay. Brill noted in his article that those who are least able to pay — the uninsured — are the ones left to pay the highest rates. One patient he wrote about, whose insurance wasn’t accepted at the hospital where he got care, was billed $7 each for alcohol pads that sell online in boxes of 200 for $1.91. Another was charged $24 for a pill sold in drug stores for about 5 cents. And those were tiny fractions of their total charges, which reached into the thousands.
Lembo said he thinks having information about the cost and quality of care could lead patients to choose lower-cost, high-quality providers, even without direct financial incentives to do so.
He noted that the price the state employee plan pays for an artificial hip varies considerably between facilities. “Does it really cost four times more from one hospital to another? I think the answer to that should be probably not,” he said.
If people could find out that a certain joint-replacement center had lower costs and high quality, Lembo said, they’d want to know. But the information has to be available in an accessible way.
And making health care data available can be a challenge. Years ago, when state officials tried to get hospitals to report adverse events so they could be available to the public, Lembo said, “It was a firefight.”
When it comes to costs, Charmel said there’s another barrier: Insurers don’t want hospitals to reveal what rates they negotiate. “I would willingly publish the rates that we’re paid,” he said. “But I’ve signed contracts saying that I can’t do it.”
Brill suggested legislation to prohibit those types of contracts between insurers and providers.
While advocating for greater transparency, Brill warned that there are limits to what it alone can achieve. He cited the case of Sean Recchi, an Ohio man whose family had to pay more than $83,000 upfront for cancer treatment. With all the transparency in the world, Brill said, Recchi could have found out exactly what the drug company and hospital CEOs made and what their profit margins were.
“He still needed the drug,” Brill said. “So transparency is important, but it can only go so far.”
“Maybe there, the value of transparency is the power of sheer embarrassment,” he added.
“My community hospital”
A focus on transparency and squeezing costs will create a lot of “noise,” Lembo said, suggesting that people will have to develop a tolerance for it. People often have attachments to the hospitals where they gave birth or where their mothers died or where they seek care. “It’s all theoretical until it’s my community hospital, my provider, my radiology suite,” Lembo said.
A question from the audience alluded to a similar challenge in targeting health care costs: Since health care is an economic driver, responsible for thousands of jobs in the state, could reducing costs impact the economy in a negative way?
“You could say that, but that’s the equivalent of saying, let’s build another F17 weapons system because it creates jobs,” Brill said. “There are more productive ways to spend money than a lot of the waste in the health care system.”
There’s another side, too, he said: A lot of people don’t get jobs because companies can’t afford to hire because of the cost of health care. And people opt against starting businesses because they’re afraid to lose their employer-sponsored health care, although he noted that the federal health law is intended to help them by providing another option for getting insurance outside of employment.
Hospital admissions will probably decrease as care is better coordinated and the payment incentives change, Charmel said. He predicted that the role of hospitals will evolve, from being involved solely in the care of sick people to having a more central function in the health of people in the community.
“We’re not talking about wholesale devastation of the hospital industry,” he said. “I know that it feels that way.”
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