High healthcare prices leave one editor considering medical tourism, despite living in one of the best healthcare cities in the world.
Healthcare is local. I've heard this hundreds, if not thousands, of times from healthcare leaders, and for many reasons, it's true. Medical staff dynamics and alignment (both level of and structural arragments) vary by market, as do the health needs of each community.
However, a recent personal healthcare experience led me to wonder if, at least in some cases, healthcare shouldn't be so local.
To be clear, all healthcare isn't and shouldn't be local. If you are diagnosed with a complex disease or have symptoms that can't be diagnosed, you are referred to a tertiary care center. These may be within an hour or two drive, or they might be across the country, for the rarest of cases.
However, certainly routine care should be local, right?
I'm starting to think the opposite. Let me tell you why.
Last month I visited a gastroenterologist, who is employed by an nationally renown academic medical center here in Chicago. It was an annual check up, with nothing out of the ordinary to note. He asked that I head over to the lab for some routine blood work, just to ensure I was healthy as I felt. With my doctor's order in hand, I took the elevator down to the lab, where I waited to be called for the three tests he had noted: A comprehensive metabolic panel, a complete blood count with automated differential and a 25-hydroxy vitamin D test.
A week later, I received the bill, which totaled $698 for the labs, plus another $40 for the blood draw and $119 for the office visit.
And because the lab was hospital-based, it applied toward my deductible, meaning my insurance wasn't covering any of it. I can thank Blue Cross Blue Shield, though, for the roughly 47 percent discount I received, which brought my bill to a slightly more manageable $451.63. Including the $20 co-pay I was asked to pay before seeing the doctor (despite my insurance card clearly denoting a specialist cop-pay of $40 — I didn't argue), the two hours cost me just under $500.
The price isn't necessarily outrageous, but a recent blog post I penned on discount lab company Theranos had me wishing they had an outpost in my neck of the woods. Theranos currently operates 22 lab locations, one at its headquarters in Silicon Valley and the others at Walgreens pharmacies in California and Arizona.
Curious of the potential savings, I ventured over to Theranos' website, where I very quickly located their "Test Menu." There I was able to search for the lab by CPT code (handily included on my bill, which allowed me to ensure an apples-to-apples comparison). The potential savings was pretty spectacular.
The savings were so significant (and maddening) that I first re-checked my CPT code amounts about five times. Then, I got to thinking about…
Medical tourism for labs?!
I did a bit of digging: For $290, I could fly Frontier Airlines from Chicago to Scottsdale, Ariz., where I could visit the Theranos lab inside the Walgreens on Thompson Peak Parkway. Factoring the cost of a rental car and the labs, the entire trip would cost me just about the same as having stayed in Chicago — which is telling in and of itself.
Where the difference occurs is if I'd had no insurance (or lacked a significant discount). In this scenario, I could saved roughly $340 on a day trip to Arizona compared to staying in Chicago. Theranos does accept insurance, but the uninsured receive the same pricing "because a test should cost the same, no matter who you are," according to the company's website.
I have insurance and value convenience, so I simply paid to $451 I owed; however, I hope that by next year, I have more options at my disposal — and maybe I will. Walgreens has partnered with Theranos for a nation-wide rollout in a "substantial" number of its locations across the country. Theranos' CEO and Founder Elizabeth Holmes wants one within five miles of every American home.
Another option would simply be taking the order to my primary care provider (who isn't employed by a hospital), and drawing the labs there. In fact, my PCP recently ordered some lab work for me (five tests, though they differed from the three previous). Chargemaster rates totaled $278, my insurer paid $56 and I owed $12 — a very big savings, largely due to the fact the labs were pulled in the ambulatory setting.
But is it really the AMC's fault?
I was angry that I didn't consider this option at the time, which would have saved me more than $400. What I wanted to do was call up the AMC and complain about the difference. But, what I know is, it isn't really their fault.
I paid more because the AMC employed the gastroenterologist I see, who is renowned in his field and a prolific researcher. He chose AMC employment, in part I assume, because of the ability to do supported research.
I paid more because my gastroenterologist is employed by an urban AMC, where Medicaid is a leading payer. Costs are shifted onto me because I have insurance.
This AMC provides trauma care and its labor rates reflect urban market prices. It costs the AMC more to provide just about any service when compared to a lab company that specializes very narrowly.
What it means for health systems
With the impetus for providing care at the lowest-cost but still appropriate site of care, I can't help but wonder how long payers, both private and public, as well as patients, will continue to put up with such disparate pricing from site to site.
While I can't exactly blame hospitals for their higher lab prices, as a consumer, it is upsetting to me that I could have saved hundreds of dollars by simply using a different site of care.
It doesn't make sense to me, and I understand the convoluted historical and economic dynamics at play. It certainly won't make sense to everyday consumers.
As more innovators, like Theranos, enter the market and gain visibility, healthcare leaders simply can't expect consumers to put up with such significant pricing variations. Healthcare leaders would be well served to prepare now for a day when every patient knows she can get a lab test for less than $10 at the Walgreens down the street.
Leaders of hospitals and health systems must develop a plan to respond to that sort of competition. Right now, it's in the lab space, but certainly, this is just the first arena of many where lower-cost innovators will be able to upset legacy players, who can't even base prices on costs because of the economic gaming that exists today.