Making General Groves Proud

With apologies to Nobel Prize winner Richard Feynman, most physicists are not known for their writing skills.  After all, these are the kids who picked time in a lab over reading Shakespeare.  Though Feynman’s personal website has a section alongside his textbooks and scientific publications for his ‘popular works,’ he holds no candle to fellow physicist Henry DeWolf Smyth when it comes to writing for the general public.

Smyth’s one big hit was released August 12, 1945 and people gobbled it up.  ‘Atomic Energy for Military Purposes’ just sounds like a ‘can’t put it down’ page-turner, doesn’t it?  Well, the US had just dropped two nuclear bombs on Hiroshima and Nagasaki the week before.  Smyth’s report was the official story of the incredibly secret Manhattan Project.

One of the amazing things about the project was the government’s ability to keep such a massive venture from becoming exposed.  That was mostly due to the relentless, paranoid secrecy of Smyth’s boss, General Leslie R. Groves, the man in charge of all Army activities related to the Manhattan Project.   A lack of cell phones and no TMZ website helped, but Groves took intelligence secrecy to new heights to keep the existence of Manhattan, much less the full scope of its work, from virtually any outside knowledge.

Hospitals and payers must have studied his tactics.  For sure, they must have his famous sign from the Los Alamos lab (What you see here, what you do here, what you hear here – when you leave here, let it stay here.) hanging in their offices.

You see, the prices negotiated between payers and hospitals have forever been as closely guarded secrets as Robert Oppenheimer’s lab in the desert north of Santa Fe.  If we had been able to keep patient health data as closeted as they have been able to keep the prices actually paid to hospitals, we’d never have needed HIPAA.

But, the Trumpsters are proposing to blow that wide open. 

As of this past January, hospitals have been required to post their retail pricing.  People know that is a waste of time because almost no one pays what is on the charge master. 

That appears to have been just a distracting opening bit to soften them up, a favorite negotiating tactic of the President.  In March, the Department of Health and Human Services published a proposed rule requiring an additional disclosure, the one that matters – the price actually paid by commercial payers, the negotiated contract rates.

Public comments were due last week, though an extension has been requested.  Of course, the incumbent stakeholders – hospitals and payers – are forecasting calamity of Biblical proportions if such proprietary trade secrets were made public. Prepare for a locust swarm, they warn.

But as we are seeing, price transparency is a consistent lever the President and his team are bringing up against healthcare costs (hello, pharma industry).   If this sticks, and I would not bet against it, physicians are likely not far behind.  Might be worth thinking about.

Gag Orders

The continued push for price transparency is a good thing, but requirements on providers must be matched with similar obligations of payers.

Eventually, today’s post will get around to attempting to say something of value, something related to the subject of price transparency, but I have to apologize for a brief digression before we start.

Several states have laws that allow people to carry a concealed weapon.  Most that do require the person to complete a safety class before receiving a permit because, handled improperly, guns are dangerous.  Can we require a similar safety class before people go spouting statistics?  These, too, can be dangerous, and we have some crazy people out there, running around waving their bad stats and worse conclusions.  Someone is going to get their head shot off if we are not more careful.

Yes, I wrote about bad stats supporting bad policy on Monday.  Two data points make a trend.

So, I was doing some reading on pricing transparency (I’ll get to my point, keep your shorts on) from one of the most highly regarded healthcare think tanks in the country and there were some hilarious observations.  I’ll keep their name confidential to protect the guilty.  Here are just two.

‘The cost of health care is expected to rise by more than 85% over the next 20 years.’

Wow, that is huge, a crisis of Biblical proportions.  That is an outrageous…wait…that is about 3.3% a year.  Oh.  85% is far scarier, isn’t it?

‘About half of Americans have tried to find out about the price of health care before getting services.’

Yes, and half apparently did not.  Which is a more telling statement? BTW, I did that math without a calculator.

Sorry, I am snarky this week. 

I guess the point is to beware policy advocates attempting to masquerade as honest data brokers.  Advocacy for a position is fine and it is to be expected that most advocates cherry-pick their data.  I confess to that as well.  But if we are to work our way through this complex mess and find some solutions, a slightly higher level of statistical literacy would be helpful. 

Digression over.

So, the piece leads with this statement: Price transparency might have the single biggest effect in informing the public about health care costs.

OK, I can’t help myself…REALLY?  Sharing information about costs might help people know more about costs?  Brilliant.  What insight.

Digression really over this time.

Look, we are supporters of price transparency, mostly because we trust markets more than the government and markets need information to be as efficient as possible.  Shine the light and let the games begin.

But the authors complain that providers are hiding behind non-disclosure agreements and gag orders in their payer contracts as an excuse to not be more transparent.  Excuse me?  Who put those provisions in the contracts?  You think we asked for them? 

You want transparency?  Fine, bring it on, but make everyone play by the same rules.  If providers are to publish their prices to patients, make the payers also share the rates they are paying everyone.

Blue Jeans, Scrap Metal and Mammograms

Many great things came from being raised by a family of farmers and teachers. I got taught the value of a good work ethic, the importance of family and good friends, an appreciation for a slice of hot apple pie, and the necessity of having a good sense of humor.

One down side to having parents with literally dirt under their fingernails was their lack of sensitivity to my need for the latest fashion, especially when it cost more. So what if the scratchy, fiberglass jeans from the Sears and Roebuck catalog screamed, ‘Social Loser.’ They covered your backside and would last through the school year. And they were cheap.

A quick search for blue jeans pricing today reveals that Walmart will sell you a pair for $12, The Gap wants $70, and you can’t get out of Neiman Marcus for less than $250.

Clearly, it is not the cost of the denim that drives such wild price variation, but the fashion cache.

On the other end of the spectrum, the high and low prices per pound for various forms of scrap metal is generally within pennies of one another. Markets simply will not tolerate price variation in commodities.

So, is a mammogram closer to a pair of blue jeans or a set of old aluminum wheels? I am struggling to find the big ‘cool’ factor for a woman based on where she got her breast exam, but prices suggest this is high fashion.

Castlight Health just released a study showing that what was paid for a mammogram ranges from $43 in Sarasota-Bradenton, FL to $1,898 in New York City, a 44x range. It is not just a city to city thing. In Dallas-Fort Worth, costs range from $50 to $1,045.

They found the same magnitude of price variation in CT scans and MRIs. As a side note, the study found that Washington DC was the lowest priced market for a CT scan of the head or brain. Of course the price should be lower in DC. If you don’t even find a brain, should you even charge at all?

This was a radiology study, but there are two general take-aways here for all independent physicians.

First, this type of thing is coming to you and your specialty. Firms like Castlight are going to make this type of data more available and more accessible to patients and consumers.

Second, back to the blue jeans vs. rusted fenders question. Here’s guessing that most consumers would rate a common radiological exam as more of a commodity. If that proves to be true, the prices are headed hard and fast toward the low end of the range and those high-priced providers are going to be hurting. Think about your services with brutal honesty, especially of your pricing is many multiples higher than competing alternatives.



Given my proud redneck heritage, I have on many occasions made up new words not previously found in the generally accepted boundaries of the English language.   There are just some things that are far better described with a good Southern word or euphemism.

From the subject of today’s post, it might look like I am at it again, but no, Guroo is a new word that was surely invented by some high cotton marketing firm that ran a lot of focus groups. Regardless of its origin, it is something you need to know.

Guroo is a new website provided by the non-profit research organization Health Care Cost Institute.

That sounds innocuous enough, but you might want to know that this is a very powerful price-comparison tool based on claims provided by United, Aetna, Humana and Assurant. Right now, the database has claims from 40 million people. This is legit.

Try it out. Go to and type in a common procedure. You’ll quickly see easy to understand numbers about what it typically costs, both nationally and in your specific market, for that medical service.

Right now, the site is focused on pre-scheduled (read: shoppable) conditions, which makes sense. Price shopping is not something you generally do on the way to the ER.

There is no quality or customer service data, and they say they are working on it. But that is not the primary driver, is it?

Cost is, right? And this is a simple, easy to use consumer oriented site that conveys with a lot of confidence what is getting paid nationally and locally.

You might want to compare how your prices compare to the database.   If you are too high, you are fixin’ to have some ‘splainin’ to do.


Can I Get a Quote on a 99214?

Several years ago, I was talking to an old school car dealer who was fit to be tied about this ‘dang Internet thing.’

He had begun having customers walk in waving print outs from some website that showed what he paid the manufacturer for the car they wanted to buy. Negotiations were starting there, not at all what he had in mind when he slapped the gaudy ‘$1,000 Off!’ sticker on the windshield.

This will destroy the car business, he muttered.

So I had to smile as I read the advice of a healthcare pricing transparency guy explaining to patients how to price shop for their lab work.

‘Go to a big lab company’s website, type in the name of your test, and find this five digit thing called a CPT Code. Now, take your new little CPT number and call around for price quotes.’

Physician practices are about to be swamped under the coming tidal wave called ICD-10, but now we are teaching everyone in America to understand CPTs? Nice marketing plan by the AMA to sell more of those reference books.

Price quoting cometh.

If your phone has not yet rung with this question, it will.

‘How much will it cost me to have this or that at your practice?’

Granted, comparing prices for a single lab CPT is not too hard for those motivated to save a buck. Try getting quotes on even a simple procedure and your head will hurt.

But now that we have websites explaining to the average fella how to compare prices for a lipid panel, it is not long until some 19 year old drops out of Stanford to build a smart phone app that will do it all for you, replete with a map and those little red flags that show you can get your test done for $19.99 at a location just 2.43 miles away.

There are a lot of buzzwords flying around as healthcare transforms. Some will fizzle and be a punchline in a few years. Price transparency is not one of those. There are too many market forces pushing for it and too many tech entrepreneurs who have a business plan for making it happen.

The car guys had to figure it out and so do you.