The savings were so significant (and maddening) that I first re-checked my CPT code amounts about five times. Then, I got to thinking about…
Medical tourism for labs?!
I did a bit of digging: For $290, I could fly Frontier Airlines from Chicago to Scottsdale, Ariz., where I could visit the Theranos lab inside the Walgreens on Thompson Peak Parkway. Factoring the cost of a rental car and the labs, the entire trip would cost me just about the same as having stayed in Chicago — which is telling in and of itself.
Where the difference occurs is if I’d had no insurance (or lacked a significant discount). In this scenario, I could saved roughly $340 on a day trip to Arizona compared to staying in Chicago. Theranos does accept insurance, but the uninsured receive the same pricing “because a test should cost the same, no matter who you are,” according to the company’s website.
I have insurance and value convenience, so I simply paid to $451 I owed; however, I hope that by next year, I have more options at my disposal — and maybe I will. Walgreens has partnered with Theranos for a nation-wide rollout in a “substantial” number of its locations across the country. Theranos’ CEO and Founder Elizabeth Holmes wants one within five miles of every American home.
Another option would simply be taking the order to my primary care provider (who isn’t employed by a hospital), and drawing the labs there. In fact, my PCP recently ordered some lab work for me (five tests, though they differed from the three previous). Chargemaster rates totaled $278, my insurer paid $56 and I owed $12 — a very big savings, largely due to the fact the labs were pulled in the ambulatory setting.
But is it really the AMC’s fault?
I was angry that I didn’t consider this option at the time, which would have saved me more than $400. What I wanted to do was call up the AMC and complain about the difference. But, what I know is, it isn’t really their fault.
I paid more because the AMC employed the gastroenterologist I see, who is renowned in his field and a prolific researcher. He chose AMC employment, in part I assume, because of the ability to do supported research.
I paid more because my gastroenterologist is employed by an urban AMC, where Medicaid is a leading payer. Costs are shifted onto me because I have insurance.
This AMC provides trauma care and its labor rates reflect urban market prices. It costs the AMC more to provide just about any service when compared to a lab company that specializes very narrowly.
What it means for health systems
With the impetus for providing care at the lowest-cost but still appropriate site of care, I can’t help but wonder how long payers, both private and public, as well as patients, will continue to put up with such disparate pricing from site to site.
While I can’t exactly blame hospitals for their higher lab prices, as a consumer, it is upsetting to me that I could have saved hundreds of dollars by simply using a different site of care.
It doesn’t make sense to me, and I understand the convoluted historical and economic dynamics at play. It certainly won’t make sense to everyday consumers.
As more innovators, like Theranos, enter the market and gain visibility, healthcare leaders simply can’t expect consumers to put up with such significant pricing variations. Healthcare leaders would be well served to prepare now for a day when every patient knows she can get a lab test for less than $10 at the Walgreens down the street.
Leaders of hospitals and health systems must develop a plan to respond to that sort of competition. Right now, it’s in the lab space, but certainly, this is just the first arena of many where lower-cost innovators will be able to upset legacy players, who can’t even base prices on costs because of the economic gaming that exists today.
