It’s time for fair pricing in medical transportation

July 6, 2016

While transparency is viewed as important to reducing consumer health costs, little has been done to affect business-to-business relationships and confront pricing practices that are often variable and opaque.

The medical transportation sector is an important but costly component of the healthcare industry. Medical transportation can be required in emergency situations as well as non-emergent situations where patients are redirected to a higher level of care or specialty care. In its current state, it is unmanaged and fraught with inconsistent pricing nationwide.

There can be dramatic differences in costs depending on the geographic area where service is provided and the provider of the service. A single medical transport event can hit six figures, and payers may or may not cover all of the cost, even when the event has been preapproved. This process has been frustrating for insurance companies and other payers, service providers and the patient.

 

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Market efficiency is driven by accurate information. In order to create an efficient market, participants need to know what they are buying and what alternatives are available.  Often, price gouging or excessive profits are generated when buyers are forced to make split second decisions with less than perfect information.  The relative comparison often comes down to, “What is a life worth?” Family members can go to extremes to protect or preserve their loved ones. As an industry, we have to ask ourselves if price transparency and negotiated rates can be utilized to better manage business-to-business markets within the medical transportation sector.

While transparency is viewed as important to reducing consumer health costs, little has been done to affect business-to-business relationships and confront pricing practices that are often variable and opaque.  In fact, the issue of defining ‘fair pricing’ within the medical transportation marketplace, for both emergent and non-emergent events, is part of the challenge.

To get a handle on what constitutes ‘fair pricing,’ we in the medical transportation industry need to address several critical issues:

·      Is the quality of service offered consistent across the industry?  

·      Are market forces sufficient to set the balance of service and price?

·      Are there better substitutes for valuation?

·      When a patient’s emotional and physical health are compromised in a moment of need, and time is of the essence, how does this complex situation remain appropriately responsive without being unnecessarily wasteful?

·     Are there inherent inefficiencies that individual providers may face such as transportation “dead legs” that fuel higher costs?

 

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·      Is there moral hazard given current insurance arrangements?

·      Is dealing with independent providers who might be motivated by underlying business hurdles a sustainable approach with costs that continue to escalate?

It is time for the medical transportation benefits industry to establish pricing and service consistency across the board for payers, providers and patients.

Next: Important goals to follow

 

A recent study conducted at the Wharton School at University of Pennsylvania suggests that benchmarking information in the medical technology market leads to savings for hospitals. Hospitals that participate in a pricing database are able to challenge suppliers and maintain better control over the financial outcomes and achieve quantifiable savings. Certainly, as the pharmacy benefits management model has also shown, there are advantages to all involved even where information is centralized and purchasing clout is used to achieve economic efficiencies for participants.

 

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Applying these lessons to the medical transportation benefits industry directed at standardizing pricing, service quality and consistent operations and process should focus on these goals:

a.       Develop a national network of credentialed fixed-wing, rotary air and ground transportation providers with fair, market-rate standardized pricing and services.

b.       Establish quality standards for care delivered during medical transportation events.

c.       Create a structure to manage clinical, financial and administrative responsibility for air and ground bedside-to-bedside medical transportation that provides consistency in services and pricing and improved communications. This keeps the payer involved in the pricing conversation so someone cannot come along and drive prices up.

d.       Set sights on reducing health plan expenses by helping to bring down the high cost of medical transport events while improving predictability of health plan claim costs.

 

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At a time when excessive, high medical transport prices and financially vulnerable patients-even though insured-are in the news more and more, there is value to coordinating business-to-business relationships in order to bring stable pricing to the industry. By developing a structure of communication and services and a national network of providers, the medical transportation benefits industry can forge partnerships between the health plans and a network of providers to stabilize pricing and standardize service.  

David Boone is chief executive officer of Alacura, a medical transportation management company dedicated to simplifying non-emergency air and ground bedside-to-bedside medical transportation for patients.