Chris Markford, CASC, of the Orthopaedic Surgery Center of Clearwater (Fla.) discusses price transparence in healthcare and what it means for the ambulatory surgery center industry.
Mr. Markford is also the co-founder of the Florida chapter of the Free Market Medical Association and has experience helping healthcare facilities reach their price transparency goals.
Q: How is the trend toward price transparency affecting the healthcare industry? What role do ASCs play?
Chris Markford: While it is exciting to see more and more facilities embrace pricing transparency, I think we are still at an early stage of this movement. The most influential player in this trend has been the consumer. The patients themselves expect transparency now that they are taking on more out of pocket responsibility. Many have called for government action which has led to many states, including my own home state of Florida, to have bills introduced that call for greater pricing transparency for the patients who utilize our services.
But the biggest driver is not the government or individual patients; it is the business community and employers who are burdened with the cost of care for their employees. They are seeking solutions that will keep those costs contained because the large national payer groups have not been successful in helping them find a solution. Employers are working with third-party administrators and businesses that provide the database of providers who are willing to offer bundled rates at a reasonable price.
The hurdle now is getting the ASC's to offer those prices. The self-funded employers are willing and eager to bypass the large insurance providers and go right to the source of care but the ASC industry, as a whole, has not provided the information they need. ASCs must be willing to take their top procedure codes and come up with an all-inclusive bundled rate that they are willing to share with the public.
Q: What is the biggest challenge for ASCs joining the price transparency movement?
CM: Being willing to go beyond the traditional method of contracting. It's easier to take the path of least resistance and it may feel like embracing transparency is going to be a lot of hassle and work added to our already busy days. But the beauty of the movement is its simplicity. Every facility knows the value of what they are offering; all they have to do is share that price with the public. They set the price. This isn't a negotiation like we are used to having with our insurance providers. There are companies that will promote your prices and get your information out to the consumers at no charge to you.
Beyond taking that first step, an ASC has to be realistic about their price. There is a reasonable number that we all have to come up with on our own and we have to be willing to adjust that number if the market dictates that we should. If you price a knee scope at $7,000 and the ASC down the road does it for $5,000, then you, as an administrator, need to take a look how you can reduce your costs to keep your margins or find a way to justify your higher price to the consumer.
Q: Where do you see the free market movement headed in the future, especially as President-elect Donald Trump takes office?
CM: Much like the election itself, the free market movement's future is unpredictable. I believe the rise of the free market movement coincided with the implementation of the Affordable Care Act because the Act itself was not the best solution to lower prices. With prices sky rocketing, innovators came up with better solutions.
President-elect Trump could develop a proposal that diminishes the urgency for a free market solution, but until we see a real reduction of consumer costs, we will keep seeing a strong push for more transparency. What I am curious to see is how Oscar Insurance pivots and tackles the issue of a possible roll back of Obamacare. The co-founder of Oscar Insurance is the brother of President-elect Trump's son-in-law so I know that the company is at least on Trump's radar. Their methodology took advantage of a lot of regulations set forth under the ACA but their corporate and founding philosophy puts them right in line with us in the free market movement.
If they pick up this mantle and adapt to the solutions we set forth, then they are in a great position to have the ear of the President and further promote our goals of a healthcare system where market forces influence price in the same way they do across all other consumer markets.
Q: How can ASCs prepare for price transparency in the future?
CM: Being willing to listen and learn is the best first step. Second to that, I would suggest they take their top CPT codes and come up with a price. Compare that price to what others are doing and come up with a justification for your rate. The breakdown of that rate will pose more of a challenge for some then for others.
Determining your share and your physician’s share of the pie is relatively simple since those decisions can be made in house; however, if your anesthesia provider is outsourced you will have to sit down with one of their decision makers and agree on a rate for the anesthesia portion of the bundled price. Having that price ready will put you in a position to respond when someone seeks you out or for when you are ready to share that price with one (or all) of the many companies out there that will connect you with employers.
They can also visit FMMA.org to learn more about the free market movement and to find a local state chapter to which they can connect. Being involved in the conversation is the best way we can make change. I don't think accepting the status quo is good for anyone so we need to be willing to stretch ourselves, take chances, and be open to new ideas. As President Truman said, "Decisions are made by those who show up."
Change is inevitable and we all have an opportunity to shape healthcare in this country if we are willing to involve ourselves and be a part of the solution.