The discussion around price transparency in health care can, at times, come across as great in theory but unrealistic in practice. Would people really use price transparency to shop for health care? Knowing the full price doesn’t seem necessary when insurance pays for it anyway, and the system is just too complicated to navigate for people to understand what they’re being charged. But there are established businesses showing us that these concerns don’t stop people from utilizing price information to plan for and lower their health expenses.
One of these business models is the Surgery Center of Oklahoma (SCO). Founded in 1997, they post fixed, transparent prices on their website for a wide range of surgical procedures—including general, oral, orthopedics, podiatry, gynecology, urology, and more. Patients are informed of the all-inclusive price of a procedure up front, which is often six to eight times cheaper than hospitals. For example, a breast biopsy costs $3,500 at the SCO and $16,244 at Mercy Hospital, which is also in Oklahoma City.
The SCO has no contracts with insurance companies, and they do not accept any money from Medicare or Medicaid. They are paid directly by the patient, or they have contracts with self-funded employers who will pay for their employees’ procedures and travel to Oklahoma. This means they have no need to cover excessive administrative costs or incentives to get more reimbursement dollars. In fact, their prices stayed the same for 25 years until inflation finally forced their hand.
They have received patients from all over the United States and even Canada who want lower prices. In a video, they highlight a patient whose health insurance denied surgery for carpal tunnel despite the recommendation of two doctors. What would have cost him tens of thousands of dollars at a hospital was slashed to just a few thousand dollars at the SCO. They also shared a story of a patient in Georgia who was quoted $40,000 for a procedure that was just $3,600 at the SCO. That patient used the SCO price to negotiate with the hospital and got the price matched. When people have information, they are empowered to act, and they will.
Another well-known business is Mark Cuban’s Cost Plus Drugs. Launched in January of 2022, they sell common generic medications for the actual cost of the drug plus a 15% markup. On their website, they give the example of Albendazole to treat parasitic infections, costing up to $500 per course when prescribed. From Cost Plus Drugs, it is just $35. They have grown significantly since they started and now offer over 6,000 medications that are 40-60% cheaper through their marketplace.
In just the first year of launching, over two million people used Cost Drugs Plus to get affordable medications. They have also created partnerships with health systems that want to lower their costs. For example, the MultiCare hospital system in Tacoma, Washington, accessed 125 generic medications through Cost Drugs Plus and saved over one million dollars in just six months. Cost Plus Drugs also recently partnered with Penn Medicine, and also works with ScionHealth in Louisville, Kentucky, and Community Health Systems in Franklin, Tennessee.
Implementing price transparency in health care is a necessary step to address rising costs. When patients have knowledge of pricing to inform where to receive their care, they can plan for their medical expenses ahead of time, and save money by choosing cheaper care options or even negotiating like the patient in Georgia. It doesn’t matter if they have insurance or if the system is too complicated to navigate. These businesses prove that patients and their families use and benefit from transparent pricing information to make healthcare decisions.