Speaker 1: Having a baby in America is expensive. By one measure,
Speaker 1: the average cost for a normal delivery in the United
Speaker 1: States is eleven thousand dollars. That's more than twice as
Speaker 1: much as in Switzerland. It's even more expensive than the
Speaker 1: deluxe suite in the private wing of a London hospital
Speaker 1: where Kate Middleton and other British royals have given birth,
Speaker 1: and in the US the price can vary wildly depending
Speaker 1: on what hospital you go to, even within the same city.
Speaker 1: You might think that the high price would mean the
Speaker 1: care is superior, but that's not the case. The United
Speaker 1: States healthcare system has alarming rates of poor outcomes for
Speaker 1: mothers and their newborns. Welcome to Prognosis, Bloomberg's podcast about
Speaker 1: the future of health care. I'm your host Michelle fay cortes.
Speaker 1: Americans pay higher prices than people in other countries for
Speaker 1: similar medical services, and the most expensive services is are
Speaker 1: not necessarily the best. Bloomberg News health reporter John Tazzi
Speaker 1: looked at one health plan that's trying to use the
Speaker 1: millions of dollars it spends each year on births to
Speaker 1: lower costs and improve outcomes from others. Sarah Rothstein pays
Speaker 1: for a lot of babies. Well, she doesn't pay herself,
Speaker 1: but the health plan she runs does. My name is
Speaker 1: Sarah Rothstein, from the director of the thirty two Health Fund.
Speaker 1: That's a big union health plan based in New York.
Speaker 1: It's affiliated with the Service Employees International Union. So our
Speaker 1: union members are office cleaners, their security guards. They're building
Speaker 1: doormen and women building maintenance people. The union negotiates contracts
Speaker 1: with employers on behalf of its members. As part of
Speaker 1: those contracts, employers contribute money to the health fund to
Speaker 1: pay for workers medical care. If you live in a
Speaker 1: big Manhattan apartment building or your company rents office space
Speaker 1: in the city, you're probably paying for some of the
Speaker 1: union's medical expenses. The thirty two b J Health Fund
Speaker 1: spends more than a billion dollars each year on medical care.
Speaker 1: It covers about two hundred thousand people, both union members
Speaker 1: and their families, and every year some of those people
Speaker 1: have babies, And in our plan we pay for about
Speaker 1: births a year, nearly a thousand of which are in
Speaker 1: downstate New York and in New Jersey. Having a baby
Speaker 1: is the top reason for planned hospital admissions among members
Speaker 1: of the thirty two b J plan, and the fund
Speaker 1: spends more than twenty million dollars a year on those births.
Speaker 1: The fund hires an outside company that administers its plan,
Speaker 1: but the fund pays the expense of medical care itself,
Speaker 1: so Sarah wants to keep costs in check while getting
Speaker 1: the best care for plan members in Sarah and her
Speaker 1: team started analyzing the funds data on childbirth, and they
Speaker 1: found two big surprises. Sarah told me about it recently
Speaker 1: in her office on Eighteenth Street in Manhattan. The first
Speaker 1: big surprise was that prices for childbirth were all over
Speaker 1: the map. We could be paying ten thousand dollars or
Speaker 1: we could be paying thirty thousand dollars, depending on the
Speaker 1: hospital that someone had their baby at, same procedure, same procedure,
Speaker 1: same region, same health plan. The difference in costs rang
Speaker 1: from about ten thousand dollars to about thirty thousand dollars
Speaker 1: just for a vaginal delivery. Sarah says Union members were
Speaker 1: also surprised. They said, you know, we assume that some
Speaker 1: hospitals would cost a little bit more. Maybe they're in
Speaker 1: a nice location, maybe the facilities look a little bit nicer.
Speaker 1: But when you have some hospitals charging so much more
Speaker 1: than others. That makes us feel like we're being ripped off.
Speaker 1: The second thing Sarah discovered was that the plan had
Speaker 1: a really big problem with the quality of maternity care.
Speaker 1: Women giving birth experience serious, unexpected problems such as blood transfusions,
Speaker 1: kidney failure, or heart failure twice as often as the
Speaker 1: national average. She also found that women on the plan
Speaker 1: experienced a high rate of episiotomys. That's an incision to
Speaker 1: widen the vaginal opening. Experts say it should happen in
Speaker 1: only about five of births, but a quarter of the
Speaker 1: births that thirty two b J paid for involved epsiotomys,
Speaker 1: and of the deliveries were cesarean sections where the baby
Speaker 1: is surgically removed through the mother's abdomen. C sections are
Speaker 1: riskier and more expensive than vaginal births. Sarah was stunned
Speaker 1: the hospitals where her members were giving birth build themselves
Speaker 1: as world class medical institutions. We have several academic medical
Speaker 1: centers in New York. We have a lot of high
Speaker 1: quality care in New Jersey, and hospitals that advertise themselves
Speaker 1: as providing only the highest quality care and only care
Speaker 1: that's my really necessary, but the hospitals didn't seem to
Speaker 1: measure up to those promises, and so it was really
Speaker 1: shocking to us to see that the hospitals that are
Speaker 1: members were using, which advertise themselves as some of the
Speaker 1: best quality hospitals in the country, aren't necessarily the safest
Speaker 1: for our members. Sarah found costs that varied widely among hospitals,
Speaker 1: and he found big quality problems, and the most expensive
Speaker 1: care wasn't necessarily better. What we've been finding after reviewing
Speaker 1: a number of episodes is that there is not a
Speaker 1: correlation between cost and quality. So higher cost doesn't mean
Speaker 1: higher quality, lower cost doesn't mean lower quality. This isn't
Speaker 1: just a problem when it comes to maternity care, and
Speaker 1: it's not just a problem for the thirty two b
Speaker 1: J Fund. Across the health care system, the price of
Speaker 1: care doesn't reflect how good the care is. Let's step
Speaker 1: back for a minute to consider how health care prices
Speaker 1: are set in the United States. Some prices are set
Speaker 1: by the government and programs like Medicare and Medicaid. These
Speaker 1: public programs are giant purchasers of health care. They spend
Speaker 1: hundreds of billions of dollars a year. They have a
Speaker 1: lot of buying power, so the government can decide how
Speaker 1: much to pay. On the other hand, if you're one
Speaker 1: of the twenty eight million Americans with no health insurance,
Speaker 1: you have zero buying power. The supplier of medical care,
Speaker 1: a hospital or doctor, can set their prices as high
Speaker 1: as they like. Unless you qualify for a charitable discount.
Speaker 1: That's the price, and you're stuck with it. Private health plans,
Speaker 1: like the thirty two b J Health Fund exists in
Speaker 1: between these two extremes. Employers and unions higher health insurance
Speaker 1: companies to negotiate with medical providers. The prices they pay
Speaker 1: are higher than what the government pays because these groups
Speaker 1: don't have as much buying power, but private health plans
Speaker 1: usually pay less than what a hospital would charge someone
Speaker 1: with no insurance at all. Each of these negotiations between
Speaker 1: health plans and medical providers is separate and hidden. The
Speaker 1: Trump administration is trying to force hospitals and insurers to
Speaker 1: make their privately negotiated prices public. The industry is fighting
Speaker 1: the plan. Hospitals and insurers want to keep these rates secret.
Speaker 1: They argue that their contracts are private and revealing the
Speaker 1: details could actually put costs up. Some experts say this
Speaker 1: lack of transparency contributes to a lot of the crazy
Speaker 1: price differences that we see in healthcare. But if you
Speaker 1: look at how much c sections costs, both nationally and
Speaker 1: in any given city, there's a huge range, from as
Speaker 1: low as four or five thousand dollars in Knoxville, Tennessee,
Speaker 1: to as high as forty dollars in San Francisco. This
Speaker 1: is Nile Brennan. I'm the CEO of the Healthcare Cost Institute.
Speaker 1: Nile's research group analyzes data from health in turns companies
Speaker 1: to better understand costs. The data is anonymized, so you
Speaker 1: can identify patients, inferers, or particular hospitals. But Nile can
Speaker 1: look at the prices that inferrors pay hospitals in the
Speaker 1: private market, the amount of money that actually changes hands. Then,
Speaker 1: if you look at San Francisco, just the San Francisco area,
Speaker 1: the price of a C section can range from fifteen
Speaker 1: thousand dollars to again forty dollars. Just like Sarah found
Speaker 1: in New York, prices are all over the place. In
Speaker 1: a functioning market, Nile says, buyers would gravitate to the
Speaker 1: lower priced services. So imagine a world where uh computer
Speaker 1: or a Toyota camray you know, could range from fifty
Speaker 1: thousand dollars. There would be absolute outrage, right and everybody
Speaker 1: would you know, flock to the fifteen dollar problems. Even
Speaker 1: simple commodity services like basically ab tests that are performed
Speaker 1: all the time don't have standard prices. We found that
Speaker 1: the prices of blood tests in our data varied from
Speaker 1: you know, as low as twenty or thirty dollars to
Speaker 1: as high as you know, nine dollars nine hud dollars plus.
Speaker 1: Healthcare providers point out that they lose money on a
Speaker 1: lot of the patients they see. Government programs like Medicare
Speaker 1: and Medicaid set prices, and hospitals say they often don't
Speaker 1: pay enough to cover expenses. Hospitals also point out that
Speaker 1: they have to treat people in emergencies regard us of
Speaker 1: the ability to pay. The industry has to comply with
Speaker 1: complex regulations, and it often can't control the cost of
Speaker 1: its inputs like labor or medication. Hospitals say the higher
Speaker 1: prices they sometimes charge to commercial health plans are necessary
Speaker 1: to keep the doors open. The American Hospital Association points
Speaker 1: out that the price of similar services varies among hospitals
Speaker 1: because of factors particular to each facility and episode of care.
Speaker 1: Some hospitals may treat patients with more complex needs or
Speaker 1: have additional expenses related to training medical residents. The average
Speaker 1: person who walks into a hospital or doctor's office won't
Speaker 1: know ahead of time what they'll be charged for a
Speaker 1: given test or procedure. You typically pay the same copay
Speaker 1: to your health plan. If you have a deductible, you
Speaker 1: may have to pay the entire amount, but you might
Speaker 1: not find out that you owe nine dollars rather than
Speaker 1: twenty dollars for the same blood test until the bill
Speaker 1: comes weeks later. Health insurance companies could exclude high cost providers,
Speaker 1: and sometimes they do, but they can't do that in
Speaker 1: markets where a big hospital system dominates, and even in
Speaker 1: more competitive markets, they're often reluctant to cut powerful providers
Speaker 1: out of their networks. Remember, Niles data knows the amounts
Speaker 1: that insurance companies actually pay, and it shows wild price
Speaker 1: spreads across all the services he's looked at. C sections,
Speaker 1: lab tests, mammograms, m ris um all exhibit in incredible
Speaker 1: and unwarranted variation that can really only be explained by
Speaker 1: the fact that people have realized that they can get
Speaker 1: away with it. Some prices are higher because people can
Speaker 1: get away with it. At the thirty two b J
Speaker 1: Health Fund, Sarah Rothstein examined what her health plan was spending,
Speaker 1: and she came to a similar conclusion. Our theory, um
Speaker 1: you know, which we can't prove because we don't have
Speaker 1: access to the contracts between the hospitals and the insurers,
Speaker 1: is that some of the health systems are able to
Speaker 1: use their market power to demand higher prices. Giving birth
Speaker 1: is a more complex procedure than allowed test, but Sarah said,
Speaker 1: the Health Fund sees variation in prices across procedures big
Speaker 1: and small, and the Fund doesn't know how it's insurance
Speaker 1: carrier negotiates those rates with hospitals. Unless we were to
Speaker 1: go to the hospitals directly and negotiate a price, we
Speaker 1: don't know how the prices are set. So, for example,
Speaker 1: if our member has a baby at the hospital, we
Speaker 1: don't know if there is a different price for a
Speaker 1: vaginal delivery or a C section. We don't know if
Speaker 1: the doctors are getting paid more if they're performing in
Speaker 1: a psiotomy than if they aren't. The Health Fund is
Speaker 1: paying the bills, but it doesn't know how prices are
Speaker 1: set or whether doctors have an incentive to provide certain
Speaker 1: types of care that could be riskier for women. And
Speaker 1: last year, the thirty two b J Health Fund decided
Speaker 1: to try to change that. Sarah wants to use the
Speaker 1: health Plans buying power, the billion plus dollars it spends
Speaker 1: on medical care every year to reward hospitals that are
Speaker 1: providing high quality care at lower prices, and in particular,
Speaker 1: he wants to use the plans clout in the market
Speaker 1: to improve maternity care. The first thing the Health Fund
Speaker 1: did was give its members an incentive to avoid the
Speaker 1: highest cost facilities in the New York area. That began
Speaker 1: in April. We now have preferred hospitals and non preferred hospitals,
Speaker 1: and having a baby at a preferred hospital as a
Speaker 1: hundred dollars, having a baby at a non prefer at
Speaker 1: hospital is a thousand dollars, So that's a big price difference.
Speaker 1: That wasn't just for maternity care. The health Plan told
Speaker 1: its members that they would face thousand dollars co pays
Speaker 1: for planned in patient services at several big hospitals such
Speaker 1: as New York Presbyterian because it found the prices at
Speaker 1: those facilities to be significantly higher than other hospitals. At
Speaker 1: other facilities, such as Mount Sinai, the normal hundred dollar
Speaker 1: copay applies. The Plan was careful to explain to members
Speaker 1: why co pays at certain hospitals went up by so much.
Speaker 1: One mailing showed how the plans costs compared at different hospitals.
Speaker 1: The average cost for having a baby at a non
Speaker 1: preferred hospital was seven thousand dollars more than at preferred hospitals.
Speaker 1: The Plan reminded union members that their employers pay up
Speaker 1: to twenty thousand dollars a year for healthcare, and rising
Speaker 1: costs left less money for wages. Then last summer, Sarah
Speaker 1: announced that the thirty two b J Plan would launch
Speaker 1: a program to encourage its members to give birth at
Speaker 1: the best performing hospitals, the ones that would deliver high
Speaker 1: quality at reasonable prices. The plan calls it the Better
Speaker 1: Birth Maternity Program. Sarah invited hospitals to apply to join it,
Speaker 1: and to get into the program, they have to reveal
Speaker 1: detailed information about their practices. You really wanted to get
Speaker 1: under the hood of the data and understand what was
Speaker 1: behind the good numbers. At the hospitals that were performing
Speaker 1: better and how they were holding their providers accountable. UM,
Speaker 1: so really kicking the tires to make sure they were
Speaker 1: doing all of the hard work that leads to better
Speaker 1: data and better outcomes. Um to make sure that it
Speaker 1: wasn't just by luck or by hoppenstance. Sarah shared a
Speaker 1: copy of the request that she sent to hospitals. It's
Speaker 1: nineteen pages and includes uSens of detailed questions. It asks
Speaker 1: about whether the hospitals limit women's health services like sterilization
Speaker 1: or contraception. It asks if factation consultants and duels are
Speaker 1: on staff. It asks for detailed data on the kind
Speaker 1: of serious harm to mothers that the plan is trying
Speaker 1: to reduce. They had to meet certain quality criteria off
Speaker 1: the bat, and then they also had to provide us
Speaker 1: with an enormous amount of data as well as providing
Speaker 1: attestation that they're adhering to the best practices as set
Speaker 1: forth by national and state organizations who have done a
Speaker 1: lot of work to figure out what leads to higher
Speaker 1: quality maternity care. She even asked about some things that
Speaker 1: the hospitals hadn't looked at themselves. The funded nudged hospitals
Speaker 1: to provide data on maternal harm in terms of race
Speaker 1: and ethnicity. Women of color experience higher rates of maternal harm,
Speaker 1: a fact that's drawn increasing attention in the medical world.
Speaker 1: One of the areas for concern for US was racial
Speaker 1: and ethnic disparities amongst maternal outcomes. Their significant data that
Speaker 1: shows that black women are particularly at risk and other
Speaker 1: women of color are a much higher risk for adverse
Speaker 1: outcomes when they're having a baby. But when the Fund
Speaker 1: asked hospitals how often women of color suffered adverse events
Speaker 1: related to childbirth, some of them couldn't answer, and a
Speaker 1: number of hospitals said, we want to work to do this,
Speaker 1: will commit to getting this data to you in the future,
Speaker 1: but we don't have the data broken out that way
Speaker 1: as of today. And that was interesting for us to hear,
Speaker 1: because if you're not measuring something, you can't figure out
Speaker 1: if you have a problem or if you have to
Speaker 1: fix it. In the fall, Sarah met in person with
Speaker 1: hospital leaders to explain why the third QBJ Health Fund
Speaker 1: wanted all this information and to learn more about how
Speaker 1: the facilities tried to ensure good outcomes in their maternity care.
Speaker 1: And so they've been good conversations. UM, we've learned a
Speaker 1: lot about how hospitals are holding prov witers accountable, how
Speaker 1: they're changing clinical models in their hospital, and they've learned
Speaker 1: a lot about a purchaser who is really concerned about
Speaker 1: the well being of its plan participants. When I spoke
Speaker 1: to Sarah in January, the plan hadn't yet announced which
Speaker 1: providers would be included, but thirty T b J will
Speaker 1: soon start telling its members which hospitals, doctors and midwives
Speaker 1: have met the standards to join the Better Birth Program,
Speaker 1: and it will offer some perks for mothers to go
Speaker 1: to these providers. The plan will reba the hundred dollar
Speaker 1: copay that members would otherwise have to pay. They'll also
Speaker 1: be a basket of stuff for mom and baby, so
Speaker 1: mom will get a nice gown, she'll get some birds, bees, products, um,
Speaker 1: things that will maybe make her feel a little bit
Speaker 1: better after delivery. And then there'll be a choice of
Speaker 1: a big thing for baby, so could be a baby carrier,
Speaker 1: a car seat. Thirty T b J will also promote
Speaker 1: the program to women on its plan. The Health Fund
Speaker 1: will send mailings and emails a few times a year
Speaker 1: directing people to a website with information about the hospitals
Speaker 1: in the program and why they've been selected. Sarah says
Speaker 1: that some members in focus groups said they want help
Speaker 1: accusing the best providers, and across the board they said
Speaker 1: they really trust us to recommend programs to them. They
Speaker 1: also really had a range of experience in maternity care.
Speaker 1: Some people who had had a first or second childhood
Speaker 1: good experiences, some people had really bad experiences, and a
Speaker 1: number of people said, I really don't know how to
Speaker 1: get the information that I need um and would welcome
Speaker 1: the Health Fund providing me with this information and figuring
Speaker 1: out what are some of the good choices for me
Speaker 1: to make. Over the next few years, Sarah and her
Speaker 1: staff will track how many women accused to use providers
Speaker 1: in the new program, and they'll also measure rates of
Speaker 1: c sections. Appease theotomies and incidents of harm to mothers.
Speaker 1: By steering members to the best, lowest cost providers, Sarah
Speaker 1: hopes to raise the bar across the entire market. There's
Speaker 1: a role for purchasers to really push healthcare providers on
Speaker 1: quality that they're not necessarily being pushed by other entities,
Speaker 1: and this helps us serve our members better as well
Speaker 1: as the rest of the public. What the thirty two
Speaker 1: b J Fund is doing is unusual, but it's worth
Speaker 1: asking why it's so extraordinary. Lots of big, sophisticated companies
Speaker 1: spend plenty of money on healthcare, they have an incentive
Speaker 1: to spend it wisely, and they all hire insurance companies
Speaker 1: to administer their plans. Those insurers could apply the same
Speaker 1: kind of pressure on hospitals that the thirty two b
Speaker 1: J Fund is, but Sarah said that really hasn't happened
Speaker 1: from Eternity Care, and even the hospitals that are interested
Speaker 1: in participating have told us they've never been asked by
Speaker 1: anyone for that level of quality data, which was shocking
Speaker 1: to us. Um and a number of hospitals also said that,
Speaker 1: you know, until recently, they themselves weren't looking at the
Speaker 1: quality data from an Alternity Care, which was shocking to
Speaker 1: us as well. For much of the last twenty years,
Speaker 1: there's been a lot of talk about how Americans need
Speaker 1: to be smarter consumers of health care. Employers raised health
Speaker 1: insurance deductibles so people would have more skin in the
Speaker 1: game and shop for care more carefully. They've effectively asked
Speaker 1: individuals to use their buying power to make the market
Speaker 1: work better, but people don't have good information on which
Speaker 1: providers are the best or how much they cost. A
Speaker 1: lot of the information that moms would need is hard
Speaker 1: to get from hospitals. It's not publicly available, and even
Speaker 1: a sophisticated consumer might have a hard time figuring out
Speaker 1: how to wade through hundreds of data points to figure
Speaker 1: out what the right facility is for them. And the
Speaker 1: employers that pay for healthcare, for the most part, haven't
Speaker 1: been doing what Sarah is doing using their own collective
Speaker 1: buying power to try to improve the health care system.
Speaker 1: It's ultimately our goal to have equally high quality care
Speaker 1: and low prices everywhere so that members can go wherever
Speaker 1: they want. But until that happens, we think it's to
Speaker 1: our advantage and to our plan participants advantage to steer
Speaker 1: plan participants to health care facilities that are lower cost
Speaker 1: and high quality. Higher costs don't mean better care. There
Speaker 1: are already some healthcare providers that deliver good care at
Speaker 1: lower prices. Their proof that the system doesn't have to
Speaker 1: be as expensive as it is and that it can
Speaker 1: perform better than it often does. On this season of Prognosis,
Speaker 1: We've looked at a lot of the ways the American
Speaker 1: health care system is broken, how it costs too much,
Speaker 1: and how it often fails people. It's a complicated problem
Speaker 1: and there's no single solution, but one place to start
Speaker 1: is with the entities were ultimately paying for a system
Speaker 1: that doesn't work very well. A few big purchasers of
Speaker 1: healthcare look carefully at where their dollars are going. If
Speaker 1: more of them did, maybe we'd all feel better about
Speaker 1: what we're paying for. And that's it for this season
Speaker 1: of Prognosis. Thanks so much for listening. We'll be back
Speaker 1: with the new season soon, but until then, you can
Speaker 1: see what our health team is up to by going
Speaker 1: to www dot Bloomberg dot com backslash Prognosis. Do you
Speaker 1: have a story about healthcare in the US or around
Speaker 1: the world, We want to hear from you. We're on
Speaker 1: Twitter at bay Cortes or at Jaytaws. If you're a
Speaker 1: fan of this episode, please take a moment to rate
Speaker 1: and review us. It really helps new listeners find the show,
Speaker 1: and don't forget to subscribe. This episode was produced by
Speaker 1: Laura Carlson. Our story editor was Rick Shine. Special thanks
Speaker 1: to Drew Armstrong Health care team leader and Francesca Levy,
Speaker 1: whose head of podcasts at Bloomberg, thanks so much for listening.