Texans enjoy living in a state that supports a free-market economy and the laws of supply and demand. Identify a need, find vendors willing to fulfill that need, compare prices and quality of the different vendors, and decide who to purchase from. It is a very simple process and crucial to running a profitable business. These basic free market tenants that operate under the laws of supply and demand exist almost everywhere – with the exception of our healthcare system.
Healthcare is the only market where we are not allowed to know the price for what we are about to purchase. Add to that anticompetitive clauses commonly used by hospitals and health systems and the result is a roadblock that prevents Texas businesses from fulfilling their fiduciary obligations to their employees and keeps an employer from obtaining something as basic as a competitive bid.
We must prohibit anything that hinders the fulfillment of an employer’s fiduciary duty and there are several specific examples of common contract practices that are anti-competitive and impede this process.
To offer a recent example faced by my organization, an employee’s child needed a drug for a procedure that is required annually. The hospital attempted to charge us $140,000 for the drug. Through our network discount we got the price reduced to $112,000. While that would seem like a reasonable reduction, it’s not as the cost of the drug was only $40,000 dollars. With a gag clause in place, we would never know the price of the drug prior to the procedure or that it was 250% more than the actual cost. The anti-steering and anti-tiering clauses in our contract would prevent us from getting the drug through another facility to make it less expensive for the employee and the employer. If the employee has a 20% co-pay on specialty drugs every year this will cost him over $21,000 instead of $10,000 if we can find a facility that would accept a 25% markup which is not difficult to do assuming you are not breaching your contract with the network. These clauses work to prevent employers from seeking and obtaining competitive bids, which is one of the most basic elements of a free market system. And as an employer we were overcharged $45,000.
Another example of how much waste there is in the current healthcare system, a surgery center in Austin bundles and posts prices online that are similar to an Oklahoma surgery center. I can fly an employee and their spouse from El Paso to either of these surgery centers, pay for their air fare, ground transportation via a limo, a stay in a 5-star hotel, all their meals, give them $1,000 in spending money, and waive their deductible and copay and still save 20 to 40% compared to what it would cost me at a local hospital. And the care that they get is superior. None of this is possible with the anti-steering and anti-tiering clauses in place. And I’m unable to compare prices and design a program that employees will benefit from if gag clauses are followed.
We must hold the healthcare system accountable to the same free market standards of other industries and ensure that contract language does not interfere with transparency and the ability to pursue higher quality and lower cost care. It’s time for statewide changes that will make a difference to prohibit anti-competitive practices and billing. Texas employers, employees and their families deserve nothing less.
Editor’s Note: The above guest column was penned by Joe LaMantia, III, (pictured above) a partner at L&F Distributors, a beer distribution company that services 35 counties throughout Texas and southeastern New Mexico and employs more than 1,200 people. The column appears in The Rio Grande Guardian International News Service with the permission of the author.
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