Price transparency is probably not feasible, most of the time. For the software developers, here's an analogy: asking your doctor how much it will cost to treat you is akin to a product manager asking you how long it will take to implement a feature. You might have a rough idea, but until you get into the requirements, do some design work, and dig into the details you can't even come up with a precise estimate. And you won't know the final time until you've actually completed the feature.
Doctors have a similar problem: too much uncertainty which can't be eliminated until the treatment is completed. They can't even tell you how much an office visit costs, because of the variability in how much time each patient needs, involvement of nurses and PAs, and any tests that must be performed.
Lab tests are a little better: they tend to take a predictable amount of time to perform, and the analysis is pretty standardized, but there's probably still some variability when the results are not routine. That explains the fairly narrow range you were eventually able to get.
I think we've got the wrong pricing model in mind for healthcare. Instead of itemizing every little action, test, and pill, we should be aggregating these costs. Pay medical professionals fixed salaries, fund institutions using budgets for fixed costs and consumables costs, and pay for it all via taxation as a common good, like public education, libraries, defense, etc.
Well, in some sense that's true of most businesses, right? Some customer interactions take up more overhead and resources than others. The trick is to aggregate that uncertainty over your customer base and come up with a price that incorporates your expected average costs. There are a lot of businesses that do this successfully because they have to in order to participate in the market. The reason health care providers don't seems to me because that are isolated from competition by heavy regulation. (I'm not saying the regulation in the health care space is necessarily a bad thing on balance, but it means that change can only come through additional regulation rather than depending on hamstrung market forces.)
Hang on. The comment you're replying to is complaining that they can't get a price for a single test, a discrete unit of health care. That's not like not being able to get a price for a completed Rails app; it's like not being able to get a price for a Macbook. I think you've moved the goalposts a little.
I did say that lab tests have less variability, which means they should be easier to price. My guess is that the reason the OP had so much trouble getting a price is because the lab simply doesn't work that way. It doesn't have a consumer price list; instead they do the work first, then determine which insurer to send the claim to, and then sometime later get paid whatever the insurer has set the standard reimbursement to be.
What the OP found on the 10th attempt to get a price was somebody who was willing to look up claims for other people who had the same test, determine what the reimbursements were, and let him know the cross-insurer range of those amounts. Or maybe the range was over the claims sent to the insurance companies, rather than the amounts the insurers actually paid. If that's the case, then the range reflects actually differences in the test processing rather than differences in the insurers.
I agree that the pricing model is wrong. Fee for service creates perverse incentives.
Having said that, though, unlike developing a new piece of software we have vast stores of data about procedures, complications, and outcomes from other patients who have already undergone the procedure. Surely there's a pricing model, if we are bound to fee for service, that could use this trove of existing data to provide more transparency.
I'd be happy with knowing pricing within half an order of magnitude.
A lot of that trove of existing data is locked up behind privacy law barriers, and there's no incentive for doing the work to strip out the PII and make it available for aggregate analysis. And since we're talking about the costs for performing medical treatments, the details that would need to be stripped out could be significant.
For example, if Procedure A tends to be more costly when the patient also needs Procedure B, that's significant. But if the aggregate information includes the fact that the same patient needed both A and B, that might be usable to identify the patient, and so the relationship can't be shared in the data.
The software development number is, arguably, almost completely unknowable. The healthcare pricing number is knowable (for some fuzzy value of knowable) if our society cared enough to do something about it. We don't, though.
> asking your doctor how much it will cost to treat you is akin to a product manager asking you how long it will take to implement a feature.
Not in all cases. If your doctor orders labs or procedures, then getting the price should be straightforward. The fact that it currently isn't is a problem.
That sounds fine on paper but does tends to cause overuse of the resource. People don’t value what they get cheaply or free. I belive NHS from UK is facing a similar problem.
"overuse" is a tricky word to use here. Are we concerned about patients getting too much "good healthcare" without being adequately grateful for it? Should we give them "adequate healthcare" instead? Or maybe "barely adequate", so that they know what they're missing?
You're probably thinking more along the lines of unnecessary tests being performed, or prescribing drugs "just in case". I have a dermatologist near me who I like and who is widely known, but every time I see her if she prescribes one drug for me, she prescribes 1 or 2 others as well for the exact same thing.
I believe that this sort of waste comes partly from a financial incentive (line items on insurance claims, or justification for them, and in my dermatologist's case kickbacks from drug companies), and partly from as a defense against being accused of malpractice. It could also be simple laziness too: order a test and let the lab try to figure out a diagnosis.
Any major overhaul of the healthcare system along the lines I proposed would need to deal with these issues as well. The financial and malpractice incentives could probably be eliminated. Maybe laziness too, assuming doctors had to get annual reviews for salary adjustments, just like everyone else.
Doctors have a similar problem: too much uncertainty which can't be eliminated until the treatment is completed. They can't even tell you how much an office visit costs, because of the variability in how much time each patient needs, involvement of nurses and PAs, and any tests that must be performed.
Lab tests are a little better: they tend to take a predictable amount of time to perform, and the analysis is pretty standardized, but there's probably still some variability when the results are not routine. That explains the fairly narrow range you were eventually able to get.
I think we've got the wrong pricing model in mind for healthcare. Instead of itemizing every little action, test, and pill, we should be aggregating these costs. Pay medical professionals fixed salaries, fund institutions using budgets for fixed costs and consumables costs, and pay for it all via taxation as a common good, like public education, libraries, defense, etc.