Healthcare pricing: Forcing change through non-payment

I just ran across a CNBC.com article written by the head of a large Denver-based consulting group (bmgi.com) who's trying (as a side project, via a nonprofit he set up) to reform healthcare by forcing hospitals and other healthcare providers to publish price lists.

Though his article on cnbc.com is rather long and rambling and could use a good edit, it gets across a rather brilliant strategy to force change in the industry: Patients come to his nonprofit (brokenhealthcare.org) with inflated or confusing bills and he guides them through the steps needed (including sample correspondence) to tell the provider or collector they will not be paid until the provider produces a published price list and a detailed account of what the final price is based on.

"Just because you signed something saying you would be responsible for your bills does not mean you have agreed to simply pay any bill presented to you. Hospitals must explain their prices and how they are derived. It is insufficient for them to merely say the charges are “customary” or other such language.

Request an explanation of how they derived the price of services you are being charged for and ask for specifics. For example, is the bill based on the time you spent in the hospital, the time doctors and nurses spent with you, the skill level or years of experience of those who cared for you? What is the formula they are using to calculate your charges, if any?"

He shows you how to avoid being reported to credit agencies for nonpayment, or rather, to force them to note the charge is "disputed" when and if they report you--again, until the provider produces a price list. He dares them to sue for payment.

His nonprofit has legal help available and is itching to take a provider to court and force this issue out in the open, to break the cartel that keeps provider pricing (he seems to focus primarily on hospitals) so secretive, variable, and confusingly billed. So far, none have taken him or the patients he represents to court--or even made them pay their disputed bills.

He's not trying to avoid paying providers what they have earned. He is trying to force them to develop a consistent and transparent pricing model--to change the law to require it, in fact.

And though he doesn't articulate it very well, I think he's saying that he wants the cost shifting going on below the surface to be fully revealed, to show who is subsidizing who among the patients being treated--which would include disclosing how much care is written off, so we can see exactly how much those who pay are transferring to those who will not. His prediction:

"You will repeatedly assert that you will pay the bill once the hospital gives you the information you are requesting. The hospital will eventually pull the bill because it would rather lose your money than reveal details about its pricing and negotiated deals with insurance companies."

If you don't feel like reading his whole piece on cnbc.com, see his video on the home page of brokenhealthcare.org. He's right: We will not solve our healthcare payment mess by merely repealing O-Care. We must have transparent pricing to force the market to yield to the forces of supply and demand, like all the other markets we each participate in, from food to haircuts to car repair.

If you work in healthcare, pass this around to your colleagues. As a provider AND a consumer, you know better than anyone how broken the pricing and payment of healthcare delivery is. The doctors I've talked to admit they have no idea how their back offices are coming up with pricing for various patients--and they just want to do their job, not mess with billing.

This guy is throwing down the gauntlet, and I believe his non-payment movement is going to spread until hospitals pry the lid off their secretive, manipulative, and deliberately confusing pricing machines.

Star . . . bust

Dear Wm. Wrigley Jr. Company:

I just bought another bag of Starburst FaveREDs, the assortment of watermelon, cherry, strawberry, and fruit punch Starburst chews.

I have had the impression in the past that there were too many of the flavors I didn't like, and too few of the ones I did like. But I had never done a quantitative analysis of this idea before.

As it turns out, I was right. When I dumped out a brand new bag and sorted them into four groups, I found that the most prevalent flavor by far is the disgusting Fruit Punch, with 36 pieces out of 81, or 44.4% of the bag. Coming up next is cherry, with 26 out of 81, or 32.1%. Watermelon is 11 pieces, or 13.6%. Finally, there's strawberry, with 8 pieces or 9.8% of the bag.

Now I realize that you can't please everyone, but why not make the flavor mix closer to equal among the four? Watermelon and strawberry are my favorites, but together they represent a paltry 22.4% of the bag! So I'm not going to buy FaveREDS anymore unless you change it so each flavor in the bag gets a quantity deviation of no more than 5%.

I am sharing this letter on my consumer affairs blog, the "eValue-ator," and I will share your response there as well.

Fis-Cares? We'll find out!

Dear Fiskars Consumer Feedback Form:

I recently went to Walmart, and bought what this page of their site lists as a Fiskars Basic Pruner: http://www.walmart.com/ip/Fiskars-Basic-Pruner/23598073

It cuts fine, but has an annoying habit of self-locking when you are squeezing the handles together. Essentially, when you are holding the tool in the position I consider most natural (front blades curving upward, as shown in all images of the tool), and squeeze the handles together, the (very light) weight of the locking tab--driven by gravity--makes the tab drop down and lock the blades together, even when you don't want them to. There should be a mechanism that holds the locking tab in place and requires pushing it downward--not just allowing it to drop downward into the notch. This seems cheap and un-Fiskars-like.

I wanted to leave this feedback on Amazon, but they don't list this tool (#9686). In fact, I can't find it anywhere but Walmart.com, so it must be a "special" model for that chain's discriminating buyers. I am sharing this note on my consumer blog and hoping others will be aware before they purchase this pruner from Walmart. I am not satisfied with this tool, now that I see how it self-locks, but I doubt Walmart will take it back in used condition. I will be happy to share your response on my consumer blog, as well, if you have a response. Thanks.

--The eValue-ator

Sears in the Twilight

Watching TV last night, I was surprised to see an ad for Sears. Specifically, they were (pre-?) promoting their Black Friday "Doorbusters." In fact, I'm always surprised to see that Sears still bothers to advertise, given their ongoing losses and such extreme financial distress that they might spin off their auto centers and Lands’ End division.

Sears was extremely important to our middle-class, suburban-style farm family in the 1960s and 70s.

Late, unlamented Wards took some of our retail dollars, and JCPenney (whose name at the time still had periods, and spaces) had the nearest thing to a department store in the small town we shopped in, but for day-in/day-out acquisition of the material good life, Sears was king.

The local Sears store (never as posh as the sign shown here) was right downtown on old Main street, in a traditional and pretty narrow storefront that stocked nothing but boring (to a kid) appliances like fridges and dryers and water heaters (all of which we bought at one time or another). But it was also the place we went to pick up everything we'd ordered from the magical Sears catalog.

Yes, there were the seasonal catalogs--Spring and Summer, Fall and Winter, and the wonderful Christmas WishBook. But several times a month, smaller Sears catalogs filled with sales and special deals and items that weren't in the big catalogs also hit our mailbox.

For a kid like me, who loved reading about products and seeing what was new and comparing prices, the Sears catalogs were a taste of everything modern and exciting in a variety that our small local stores just couldn't stock: Clock radios, TVs, bicycles, power tools, watches, cameras, water skis, you name it--it was all there--Just a phone call away.

Mom would call the local Sears store and say "I'd like to place an order" and the clerks would take her catalog numbers and name and say, "You can come pick it up on Thursday!"

I think it usually took only 4 or 5 days, although occasionally something popular might take a week and a half, and we didn't mind waiting. The next time mom was in town for groceries, she'd stop at Sears, write a check, and stick the goods in the trunk.

I can picture the family car (an Oldsmobile) slowing down to turn into our farmyard after I'd been home from school a couple hours, anticipating Mom bringing home something I'd ordered--Like my first Instamatic camera, my waterproof divers' watch with glow-in-the-dark hands, or a darkroom kit--All purchased after long and serious consideration and months of dreaming in the pages of the Sears catalog.

When we would go to see relatives in a bigger Midwest city, the big Sears at their mall was a place of glamour. They had, it seemed, almost everything in the catalog in stock, even a candy counter where you could buy treats by the pound. You could buy LP records made by a Sears recording label (I have some from the 60s in my record collection). It was about the ultimate retail experience. My aunt and uncle, like us, bought nearly everything there--and without time-consuming waits.

Dad got most of his hand and power tools from Sears--occasionally Wards, which would ship them directly rather than have you pick them up--and even quite a few of our clothes came from Sears. I wouldn't say we never went to a clothing store (usually Penney's), but for a lot of things it was just easier to find what you wanted in the catalog and place an order (and in the 70s, that often meant polyester was involved!).

I really loved the blue running shoes with white stripes--clearly a Nike knock-off--that I got from the Sears catalog around 1978 or so. But it was one of the last clothing items I recall getting from Sears, because by then I was in high school and we preferred to go to one of the real malls that had sprung up in our mostly rural state, even if it was a couple hours away, with far more stores than Sears to choose from.

Now, Sears struggles for life, and with the many online and brick-and-mortar choices available to me in a big city, its passing will have little impact on my family’s daily life.

A former Kmart near us became a Sears "Grand" a few years ago. As a “Grand,” it had a food “pantry” section and drugstore departments, very similar to the Kmart it replaced. Despite being near a busy intersection, it was nearly always empty, which I actually liked because I could stop by on the way home from work and get in and out quickly for commodity items like shampoo or batteries. No lines, no crowding.

They later converted it back to Kmart, but it remained empty and lasted only about a year before closing for good. (You know things are bad when your Kmart division is outselling your Sears division, though you have to wonder about the skill of their retail managers at reading local sales and economic data to arrive at such frequent and costly brand-flipping decisions.)

I have seen some stories about how the land and buildings that make up what remains of the Sears retail chain are actually worth more than whole value of the brand itself. Their Craftsman and Kenmore brands are still worth something, but I see that they're starting to sell Craftsman at True Value (and Kmart) and clearly preparing for a day when the whole thing winds down.

I have good memories of Sears, but its time has clearly passed. My teenagers have zero connection to the Sears brand, despite being in one a few times. My parents’ Sears religion has been converted to our family’s retail faith in Amazon/Target/Walmart.

The Damp Reality

Dear United States Postal Service:

We have a persistent issue receiving magazines in our mailbox that have a wet, wrinkly, and pages-stuck-together spot on the front or back. It has been a recurring issue all summer, and occurred again today. We suspect that the wetness and deterioration comes from a carrier's perspiration or perhaps a dripping water bottle in his or her bag of mail. In any case, it is icky and degrades the quality (and sometimes readability) of our magazines. I will be sharing this letter with readers of my consumer-affairs blog online, and will be happy to share your response with them, as well.

Sincerely,

The eValue-ator

Response (two days later):

Dear [eValue-ator]:

We will act immediately to ensure that your mail, your carrier’s performance, and service in general receive more care and attention. We must catch mistakes like the ones you brought to our attention before they happen. We are truly disappointed that we did not provide you with good service. We will make extended efforts to improve upon our performance, as we value your business and would like to keep you as a satisfied customer.

Thank you for the opportunity to address this matter with you.


[local city name] Post Office

Thanks, post office. We'll be alert to damp mail from now on and let you know.

Eddie Bauer, the Response

It took several weeks, but Eddie Bauer headquarters finally responded to my criticism of their hyper-aggressive retail sales staff. I'm proud to have my comments shared with their "leadership team" and sincerely hope that some heads will get banged together over their foolish, heavy-handed, utterly repellant customer stalking. Perhaps it's time for a re-visit, unless of course this email was written with "AutoResponder 7.0 software" and the corporation is so bureaucratic that it takes weeks for leadership to actually read and react.

"Dear [eValue-ator]:

Thank you for contacting Eddie Bauer regarding your recent experience in our store. I am pleased to hear that you have been such an ambassador of the Eddie Bauer brand for many years. However, it is always an immediate concern to hear when a customer is disappointed in our service. I genuinely apologize for any dissatisfaction you experienced during your visit.

We do ask our sale associates to follow five requirements that include greeting the customer and asking questions to ascertain the customer's needs to help them find what they are looking for. Certainly, your indication that you were simply browsing and did not need further help should have clearly defined your needs.

At Eddie Bauer, we strive to develop a sales staff that is attentive and enhances the selling experience by listening to the customer. Assistance should be offered but not forced. From your description, it certainly sounds as though we failed to listen to your needs and respond appropriately.

I appreciate the time you took out of your schedule to write us regarding your shopping experience. We take great interest in our customer’s feedback on the products and experiences on which our brand was built.

It is our practice to share customer comments with the leadership team responsible for your experience. We can only hope that you will remain a loyal customer and allow us another opportunity to extend to you the premier level of satisfaction our company demands.

Sincerely,

[name of responder]

Office of the President

Eddie Bauer"

High-Guilt Sweetener Drama

High-fructose corn syrup (HFCS) has spent several years becoming the villain of health reformers and public-health do-gooders, taking the blame as an almost unstoppable force behind climbing levels of obesity, diabetes, and the other public health "epidemics." In fact, many health advocates say that HFCS is the latest tool of big, evil food companies (and/or the medical/industrial complex) trying to KILL us all! BAN IT NOW!

A new story in Scientific American ("Is Sugar Really Toxic?") reinforces what I have always believed: There is nothing inherently harmful about consuming modest amounts of HFCS, or any other sugar, as part of a balanced diet.

HFCS is a miracle of science, a cheap sweetener that brings pleasure and variety to our diet. Our family loves a good salad, a serving of freshly steamed broccoli, or a slice of whole-wheat toast. But we also enjoy an occasional can of ice-cold soda, scoop of Sherbet, or bowl of Super Sugar Crisp (now the absurdly renamed "Golden Crisp.")--all infused with HFCS. 

Jog on, food-control nannies--we're going to continue to eat modest portions of what tastes good, and let the joyless extremists vacillate between public denunciations of supposedly evil foods and the secret binges that feed the guilt they attempt to inflict on everyone else. (And by the way, our kids have far fewer cavities than my spouse and I, who grew up in an era before HFCS existed.)