Hospitals, consumers should determine pricing
Healthcare pricing is quite a tricky business.
It's not, say, like the plumbing industry, where we could easily say the best plumbers should be able to charge the highest rates – free of government regulation — leaving consumers to decide if they want to pay for higher quality at a higher price, or just go with the low bid.
When it comes to their health, consumers aren't very likely to choose the low price option on their own, at least not without a lot of education on what separates one from the other. People in life-or-death situations aren't going to tell an ambulance driver to bring them to the less-expensive hospital. While pricing in health care is finally making its way into the consciousness of consumers, much of that coverage and negotiation is still in the hands of their insurers. We're simply not at the point where consumers have the tools, the confidence or sufficient incentive to find the best health care provider at the most competitive price.
That being said, it is a slippery slope for the state to step in and place further controls on hospitals and other health care providers on how much they can charge for specific procedures.
In Staff Writer Emily Micucci's cover story, Central Massachusetts hospitals came out strongly against a state legislative bill and two 2016 ballot initiatives that would set both a floor and a ceiling for how much health care providers can collect in revenue for their services. Even the small regional hospitals that would presumably benefit from a reduction in the price disparity between them and their larger, urban counterparts are against the measures. Is that because the small hospitals just don't want to create any waves and upset the bigger fish in the pool? Perhaps that is a factor, but the overriding one seems to be a resistance to an overly heavy hand by regulation.
In business, companies with a higher-quality service are able to command a premium. Collecting that higher-than-average fee allows those firms to continue to recruit top talent and invest in the latest technology. Granted, this supply-and-demand relationship does not match up apples to apples when it comes to health care — and as our article points out, the high-cost hospitals don't always have the highest-rated services.
Nonetheless, the health care industry is moving toward a new payment model where providers are rewarded for keeping their patient populations healthy, rather than simply treating them when they are sick. This change from the sick-care model that has ruled the industry for more than a century should keep costs in check and serve to decrease the price disparity between providers, but it will take time to develop. Therefore, the Massachusetts legislature needs to be more patient and avoid this heavy-handed approach to reigning in price disparities, giving the new health care model time to work out its kinks. There are times for prudent regulation and times where the free market does the most efficient job in rewarding those who deliver quality services at a competitive overall cost. On the hospital rate side of the equation, this is a time for a little more patience and not a regulatory intervention.
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