Authors of a recent Health Affairs blog are looking to find new ways to encourage hospital price competition to curb the cost of health care in the U.S., and reimagining providers as consumers could be key.
While health care costs are high, those expenses are less the result of outcomes and more about the price of services. Hospital care prices in particular, which account for about one-third of health care spending in the U.S., have little to no relation to outcomes. Hospital care prices vary considerably across the country, and are often the result of no market competition.
Similarly, patients themselves cannot function as traditional consumers in this framework: Hospital care is not organized into well-defined services easily understood. Each service is billed separately and charges are taken from a complex and convoluted set of billing codes, which makes it difficult for patients to shop for their services. In addition, insurance providers insulate patients from actual costs and are not in a position to apply pressure for more competitive rates.
Accountable care organizations (ACOs) could, in theory help reduce the cost of health care, but thus far have met only limited success, as they attempt to organize and provide all care within their own network of providers.
“This may allow for better care integration and coordination, but it prevents them from taking advantage of providers outside the ACO who may be able to deliver lower-price, high-quality care because of their greater specialization,” the blog states.
The authors consider the possibility of expanded use of bundled payments as a way to foster greater competition.