The human side of healthcare: When treatment is at risk because profit takes priority

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For the New Haven parents of one young boy who needed a tonsillectomy, the news was grim. Not because his diagnosis was risky or complicated, but because the family’s hospital rejected their health insurance and demanded $9,000 up front for the procedure. By the time their son would be eating ice chips and Jell-O post-surgery, a minimum of $10,000 more would be due.

This inflexible posture taken by a reputable Connecticut provider in the face of a healthcare consumer in need is disturbing. Fortunately for Americans, the U.S. provides access to much of the finest medical care in the world – skilled doctors and nurses and clinicians whose priority is patient care. Unfortunately, the broken part of our healthcare system is the way we pay, and it trickles down from the facilities to the employers to the employees to the families.

An independent study conducted by Castlight Health, a San Francisco-based healthcare price transparency company, shows pricing variations for common procedures that are sometimes five-fold within the same geographic area. Every single day hardworking people are hit with charges that are difficult to understand and challenging to justify.

Remarkably, after extensive time and effort in wrangling with the facility, the New Haven parents were able to have their child’s same physician perform the procedure at an affiliated local surgical center instead, for a prices of less than $2,000, or about one tenth of the cost.

The more than 150 million Americans who get their healthcare coverage from their employer are equally at risk for denial by a healthcare facility. Yet inexplicably absent from mainstream news coverage of healthcare reform are the challenges facing those employers – employers who struggle to provide adequate healthcare to their workers.

In many cases, health plan costs rise annually and far faster than a company’s earnings. This negatively impacts multiple areas of business and the very employees the plans are designed to protect. These rising costs lead to less hiring of new employees, less investment back into the business, less competitiveness in their market space, and a gradual erosion of their employees’ standard of living. Suddenly, the conversation shifts to rising healthcare costs being not simply an economic issue but arguably a quality-of-life issue for the workforce, rather than an insurance regulation discussion.

For many of these employers, options are few. Each year, the open enrollment period serves up more of the same – ineffective traditional PPO models that are constructed on vague cost details with misleading discounts based on inflated prices, all underscored by a pervading lack of control.

Trading a PPO for an approach known as reference-based pricing is both a viable alternative and a business-saving strategy that’s gaining significant traction. Referenced-based pricing restores information and control to employers and their workforce because the coverage plan defines pricing limits upon which claims will be paid. It’s been around for over a decade, and has been adopted by thousands of employers for its cost-saving benefits and transparent view into healthcare expenses.

An approach like referenced-based pricing builds bridges between employers and hospitals while making healthcare a community-centric solution that supports open dialogue between patients and providers. These direct relationships are the remedy to America’s ineffective insurance process that has failed to contain costs or improve quality. Instead of health benefits being provided through insurance company intermediaries, addressing healthcare costs needs to be between the medical providers and the employers in the communities they serve.

Collaboration and direct partnerships between employers and their community medical facilities is a proven approach for resolving the issue of high healthcare costs. It’s past time for businesses and the medical community to innovate and provide a viable alternative for affordable healthcare that employers, and their 150 million employees, can count on here in Connecticut and nationwide.

Steve Kelly is the CEO and founder of ELAP Services, a healthcare cost reduction and auditing firm.

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