I finally got a chance to digest a speech Health & Human Services Secretary Alex Azar gave last week—and there was a lot of meat in it. On the surface, the remarks, delivered to a group of hospital executives last Monday, were about the transformation of the U.S. health system from its current fee-for-service model to a so-called “value” paradigm—in short, creating a new system where payments would be based on the health outcomes of patients rather than on the stuff done to them. (Yes, a little harshly worded, I know.)
I recently wrote about a great conversation I had at the World Economic Forum on this value paradigm, which you can read here. Azar had some good things to say on this front, too—as well as a little fire and brimstone:
“Federal spending on our major healthcare programs is projected to rise from 5.5 percent of our economy in 2016 to 8.9 percent of our entire economy 30 years from now. By themselves, these programs will consume almost all of the income taxes collected by the federal government. It would be one thing if this were accompanied by increasing quality … but it’s not the deal we’re getting right now.”
But the stuff I found most compelling was Azar’s emphasis on price transparency. (The Secretary used the word “transparency” or “transparent” six times in his speech.) The fact is, consumers of healthcare in America have virtually no idea ahead of time what they’re going to pay for those goods and services. And they often don’t know after the fact either. In many cases, the people purchasing such services don’t know who delivered said services, whether they were necessary, or whether they were worth anywhere close to what was charged. And judging by the raft of emails I got after my Brainstorm Health essay last Wednesday (“Healthcare Costs Too Much, In Part, Because Hospitals Bill Too Much”), it’s clear Americans are plum angry about it.
As with the physician I wrote about in Wednesday’s essay, Secretary Azar, a lawyer and former drug exec, reveals a story about his own awakening to the opaque pricing outrage—which happened when he found himself being admitted to the hospital for a routine echocardiogram. The price of the test, at $5,500 (several times the national average), was scandalous enough. But what really frustrated him was that almost no one at the medical center would tell him the price to begin with.
This essay appears in today’s edition of the Fortune Brainstorm Health Daily. Get it delivered straight to your inbox.