Castlight is a relatively new company that works in the business of health price transparency. They sell software to employers, whose workers can then compare the costs of various health-care providers.
"We realized people were paying more and more out of pocket," says Castlight CEO Gio Colella. "The average deductible is about $5,000 in an industry where people have little understanding of what they're paying for. We wanted to solve that problem."
Castlight's first study looked at the price of colonoscopies and found a huge variation. The same doctor's fees could vary five-fold depending on which hospital he performed the procedure at.
"That part blew me away," said Colella, a doctor by training. "It didn't make sense to me. My engineers started coming back with data, and I thought there were errors in it."
Castlight now works with employers who, collectively, cover 3.7 million workers. They have access to the insurance claims for all those people, which makes up one the larger troves of private health price data.
The clearest takeaway from the Castlight data is that there is huge, huge variation in what doctors charge. The map of Washington above, which shows the prices for ankle MRIs, is pretty much par for the course. Across the country, a number of cities see four-fold variation in how much providers charge for the same procedure.
"I don't think they're a bad guy," he says. "They're using a system in which they believe this is what their value is. The ecosystem is complex."
Castlight has seen some health providers reduce their fees once the data became public. In one particularly extreme example, a Midwestern hospital cut their charge for outpatient radiation by 60 percent after Castlight made the price public.
But others don't necessarily see the need to compete on price. The Castlight site also includes information on quality, with rankings of various doctors' outcomes on given procedures. Some hospitals might feel emboldened to charge more if they can deliver better results.
"Cleveland Clinic is probably one of the most expensive providers in their state, if not the country," Colella says. "But the CEO, who is a visionary, says that train has left the station, and that they'll compete on quality."
Colella is optimistic that transparency can dramatically reduce costs — which isn't surprising, given that he is in the business of health price transparency. But the way he sees it is this: The government is unlikely to start regulating the price of health care any time soon. Encouraging consumers to push for lower prices is another approach.
"There's the hospital that literally dropped its rate by 60 percent," Colella says. "In a sense, a lot of hospitals are trying to figure out how to provide fair prices. That's why we think transparency is so critical."