When you walk onto a car lot to buy a new vehicle, you’re under no illusion. That price on the window? That’s the sticker price, and it’s higher than it needs to be. Even the invoice price, the amount you agree to pay in the end, is well above the wholesale price; i.e. what the dealer pays. These three prices – sticker, invoice and wholesale – are essential information whenever you’re shopping for a big-ticket item. The same goes for health care, which is a fact that many people are unaware of. Unfortunately, they miss major cost-saving opportunities as a result.
The surprising similarities between buying cars and group health insurance
Think for a moment of the preparation that savvy buyers make before they ever walk into a car dealership. They do online research about the car and the cost, figure out which features are personally important to them, and make a plan to get the sticker price down to a number they’re willing to pay.
Now let’s see what happens if a buyer purchased a car using the tactics that most people use to purchase health care. Instead of preparing themselves to negotiate, they assume the dealer is just going to give them the best deal, no haggling necessary. Or perhaps they assume there’s no point in arguing: The price is the price. Obviously, they’d end up paying more than needed.
Cars and health care have this in common. Those who do research in advance, take the time to understand the difference between the sticker price and the wholesale price, decide in advance on an acceptable range, learn what the competition is charging, and engage in negotiations as well-informed customers – they end up paying much less than they otherwise would have.
What if we bought group health insurance the way we buy cars?
In most large purchases – whether it’s a car, a house or a laptop – we’re so well-informed, we could be salespeople for those items by the time we’re done educating ourselves. Yet when it comes to health care, most people assume the listed price is a fact of life, the services offered are simply the services offered, and there’s nothing they can do about it.
That simply isn’t true. For example, one patient’s colonoscopy may cost $639, CNN said, while another patient can get the exact same procedure for $426 – a discount of more than $200. What’s the difference? Not the wholesale price: We’re talking about the same retail service.
It comes down to this: With research, you can cut health care costs by 15 percent or more. That goes for individuals shopping services for themselves, as well as employers buying coverage for large groups of people. It doesn’t require a lot of imagination to see how streamlining these costs (or allowing them to remain bloated) will impact your bottom line.
Discover cost-plus health care pricing
At BeaconPath, we help our group health clients to pay what we call “cost plus” pricing. That’s better than paying wholesale and a whole lot better than the retail prices you’re probably paying now. It means we research the base cost of care, and negotiate a reasonable add-on or “plus” for the provider, that is typically less than both the retail and wholesale published rates. The right partner, with the right information, can do that for your company. It’s a simple yet important step forward in taking control of the high cost of health care.