Totally Wasted: A Story About Market Failure in Healthcare

Have you ever sat down to go through your personal budget and, as you’re scanning through your purchases, thought to yourself, I could have gotten that for less? You add up all those “could-haves”, and you’re left with a sum at the end of the month that you wish could have gone towards new shoes, or maybe a start of a vacation fund.  At the time of these purchases, when you overpay for a good or a service, you have produced waste within your budget.

My company produces a report that analyzes a group’s healthcare spending in a similar fashion. We don’t adjust if they should have or should not have purchased, but simply, what could they have saved if they had an opportunity to shop for and receive care at the most cost-effective provider.

This report highlights the wild price variation in healthcare by identifying where a patient could have received care for the same exact procedure and aggregating the difference across the entire medical claims history for the group. We title this report Claims Hindsight Analysis, and as the saying goes, hindsight is 20/20, and thus, you’ll never repeat your claims history.

The total identified savings opportunity produced as a result of this report can be astounding. When providing this report to the company’s advisor, I make sure to inform them that this figure is with perfect shopping, 100% of the time, which is idealistic. It’s not possible. Not in today’s imperfect healthcare market. But even if the group were to grab 10% of this opportunity, there would be, in most cases, an ROI greater than 1.

This analysis emphasizes (sometimes brutally) the waste that can take place in healthcare. As reported by the recently published JAMA article “Waste in the US Health Care System”, the total annual costs of waste  in the US totals somewhere between  $760 billion to $935 billion.

As stated by the author of the article, “First, enhancing cost transparency might help. Addressing payment discrepancies between hospital outpatient facilities and office-based practices is crucial and has begun to happen. However, to meaningfully tackle costs and waste, it is necessary to address the high prices and administrative complexity that plague the US health care system, because, as the infamous bank robber Willie Sutton said when asked why he robbed banks, that is where the money is.”

I recently completed an analysis for a potential broker-partner who I want to work with in order to provide meaningful, valuable savings to their clients. It was my first interaction with them, although my team had provided a lunch and learn to their firm almost a year ago. They had reached out to me and indicated that they had a group that could benefit from our platform. To qualify the group, I offered to perform the Claims Hindsight analysis after learning a little more about the employer and their employees. The group is self-insured, with almost 400 enrollees in the New England and Mid-Atlantic regions.

The analysis indicated that almost 2/3rds of the group’s medical spend had been identified as a savings opportunity. That means that the employees are frequently and severely wasting, sometimes egregiously, and could save money by opting for care at high-quality, cost-effective facilities instead. High total waste means high total savings opportunity. That appears to me to be a very good thing.

The advisor did not see it that way. They first indicated that our analysis was inaccurate, or impossible, and that they would not feel comfortable putting these numbers in front of a CFO. So, I went back to my data analytics team and asked them to complete the analysis again. They growled, but obliged.

The results remained the same. 64% of the total spend was identified as total savings opportunity. Now, I want to note, I wouldn’t place this lump sum in front of a CFO without first identifying that this is with perfect shopping (unattainable), but with the right tools and incentives in place, a portion of this waste can be recaptured. It needs to be realistic, for the advisor, for the employer group, and for my company, as that’s the figure we’d be held to regarding our performance.

I indicated that the appropriate engagement and utilization levels can be applied to this figure to provide more realistic savings to be captured. Even after applying very, very low engagement percentages (10%), the ROI for the group could still be 7x, or well over $300,000 in savings as a result of shopping.

And yet still, the advisor informed me that these figures seem inflated. They felt very uncomfortable with these figures and indicated they felt unrealistic. And then proceeded to question the viability of our platform, who are our clients, etc. This may be my own bias and lack of intonation given email communication. Maybe I let the pride I feel for my team’s platform get in the way of addressing her questions and providing real examples of customers who have benefited.

So, what’s critically important about all of this?

I don’t need to inflate these numbers. This is the current state of costs regarding employer-sponsored health care. Prices between providers can vary by 20x. You compound the instances of employees receiving care at high-cost providers, where the price variation is hundreds, if not thousands, of dollars, it’s no wonder how astronomically inefficient and wasteful employers can be.

And of course, as an advisor, I wouldn’t want to share these figures with a CFO client. Especially one who runs a self-funded group. That’s money right out of their pocket. And then the difficult questions arise for the advisor, like “What have you done to control these costs? Why are these costs so high? How are we reining in the waste?”

To continue my story, the advisor informed me that they would like to hold off our discussion, the group is busy with many implementations, no time, no resources, same old excuses I hear time and time again. In the meantime, the employer will continue to overspend on healthcare.

Many of us probably read the reports about the waste in healthcare and think “no duh.” Waste stemming from being ignorant of marketplace price variation is one problem. But what about when  we choose to ignore the potential savings opportunities out of fear of trying something new? This total cost of waste was for one group of only 400 employees. Can you imagine what that must look like when the employee count grows to 1,000? 2,000? But the market’s pricing variation can be the employer groups’ and the advisor’s opportunity for success. As stated by the author, “removing waste from US health care will require both awakening a sleepy status quo and shifting power to wrest it from the grip of greed.”

MMS Claims Hindsight Example

Sample Claims Hindsight Report

MyMedicalShopper’s Comparison Shopping Platform Receives Independent Program Validation from the Validation Institute

Platform Determined to Produce Measurable ROI and Significant Healthcare Cost Savings

Portsmouth, NH – August 28, 2019 – MMS Analytics, Inc. dba MyMedicalShopper, the leading provider of healthcare price transparency solutions, announced that its MyMedicalShopper™ Mobile Price Transparency solution, has been validated by the Validation Institute, an independent, objective, 3rd party organization focused on changing health care.

MyMedicalShopper is a comprehensive platform sold to employer groups that is designed to drive down the cost of healthcare while improving employee benefits. With MyMedicalShopper, employees previously unaware of the wild variations in prices for medical procedures and testing can choose care based on price, quality, and convenience with unprecedented access to the previously secretive prices negotiated between insurance carriers and providers. The company’s analysts estimate that roughly 41% of an employer’s annual healthcare spending could be saved if employees shop for their care and selected lower-cost high-quality providers.

“It’s an honor to receive this validation for MyMedicalShopper from the Validation Institute. Their independent verification of our customer’s claims gives prospective insurance brokers and employers confidence in MyMedicalShopper’s ability to generate healthcare claims savings, and further enhances our credibility in the market,” says MyMedicalShopper co-founder and CEO, Mark Galvin.

 “The Validation Institute only validates high-quality programs that deliver proven results that reduce healthcare spending. MyMedicalShopper was found to have a credible impact on healthcare costs and delivers on its claims,” says RD Whitney, CEO of Validation Institute.

MyMedicalShopper is available through benefit brokers and consultants serving both the fully insured and self-funded employer markets. The platform integrates with over 100 health plan member portals providing real-time deductible tracking, in- and out-of-network facility information, and other personalized plan details to help employees manage out-of-pocket expenses and plan for future procedures.  

MyMedicalShopper empowers employers and their employees to take control of their healthcare costs on over 10,000 medical tests and procedures by making it easy to shop for low-cost, high-quality medical care. 

About MMS Analytics, Inc. ( 

MMS Analytics, Inc. dba MyMedicalShopper™ is a big data company on a mission to build technology, products, and services to drive meaningful savings from the cost of healthcare in the United States. The company was founded on the belief that fixing the broken healthcare marketplace required focus on the alignment of financial incentives, medical price transparency, and the reduction of administrative overhead. The company empowers employers and their employees with the ability to choose care based on price, quality, and convenience with unprecedented access to the previously secretive prices negotiated between insurance carriers and providers. Experts document that as much as $1 trillion could be slashed annually from the cost of healthcare in the United States. MyMedicalShopper aims to help transform the healthcare industry into a fair market for consumers.

To learn more or schedule a demonstration visit:  

About Validation Institute. (

Validation Institute is an independent, objective, 3rd party organization on a mission to improve the quality and cost of healthcare. Based in Portsmouth, N.H., the organization is made up of a network of health benefits purchasers, health benefits advisors, and healthcare solution providers focused on delivering better health value and stronger outcomes than conventional healthcare.


Mark Galvin


How a price transparency tool can help maximize the value of an HSA!

Health savings accounts (HSAs) provide employees enrolled in high-deductible health plans (HDHPs), a tax-advantaged way to save and pay for out-of-pocket medical expenses. Combining a price transparency solution with an HSA account allows employees to decrease their healthcare costs by 30 to 40 percent today and maximize the value of an HSA for future medical expenses. Financial experts estimate that the average couple retiring today will need $285,000 to cover healthcare costs during retirement. An HSA combined with a price transparency solution is a powerful employee benefit that improves their lives both today and tomorrow.

The Employee Benefit Research Institute (EBRI) reported that for 2017, the average individual HSA contribution was $2,843, and distribution was $1,725, leaving a year-end balance of $1,118 for future medical expenses.

Our analysts estimate that 30 to 40 percent of healthcare costs are shoppable. Giving employees a tool to compare price and quality before going to the doctor empowers them to make more informed care decisions, reduces healthcare costs, and allows HSA contributions to go even further.

For example, if the “average” HSA individual contributor above shopped and saved 30 percent on healthcare costs, they’d have an extra $518 in their account over someone who didn’t shop in one year alone. With tax-free growth on the HSA investment, those savings could be worth an extra $8,247 in ten years — not a bad ROI for a few minutes of comparison shopping before making an appointment.

Using a price transparency tool to shop for healthcare can reduce yearly HSA distributions and let the savings add up!

HSA Overview

Employees enrolled in a high deductible health plan (HDHP), also called an HSA Eligible Plan, are eligible* to open an HSA account. If the name “high deductible” scares you or your employees, it shouldn’t, as these accounts are a great way to lower healthcare costs.

HSAs offer a tax-advantaged way to pay for qualified medical expenses (e.g., deductibles, copayments, coinsurance, and some other costs, but not premiums). With an HDHP and HSA, employees may be able to lower their overall healthcare costs in the form of premium and out-of-pocket expense savings.

Both employers and employees can fund an HSA using pre-tax dollars. For 2019, the minimum plan deductible needed for an HDHP/HSA Eligible Plan is $1,350 for individuals and $2,700 for a family. For 2020, the minimum deductible increases to $1,400 for individuals and $2,800 for a family.

For 2019, employees/employers can contribute up to $3,500 for individual coverage and $7,000 for family coverage into their HSA. In 2020, the IRS limit increases to $3,550 for individual coverage and $7,100 for family coverage. People 55 or older are eligible to make an additional $1,000 catch-up contribution per year into their HSAs.  

HSAs roll over unspent funds to the following year and are “portable” if/when an employee changes employers. HSA contributions may earn interest or be invested (in mutual funds, etc.) where earnings and withdrawals are non-taxable when used for “qualified” expenses. There’s no tax on contributions, no tax on earnings, and no tax on qualified withdrawals…that’s a triple tax advantage!!!

Why price transparency is needed

Seeking out high-quality, lower-cost providers when non-emergent care is needed lowers overall healthcare costs and allows HSA dollars to go further. But unfortunately, healthcare prices are almost never posted anywhere, making it nearly impossible for consumers to compare provider prices and quality before making an appointment.

Massive pricing variations in healthcare are common. Secret deals between providers and insurance carriers have created a healthcare marketplace where the cost of even a routine medical procedure can vary 1,000% across providers in the same market. 

Need a lipid panel (cholesterol test)? That might cost $15 at one provider and $240 at another just a half-mile away.  Total knee arthroplasty? Would you rather pay $2,268, or $18,477? Heading to the hospital for a few stitches after accidentally testing that fillet knife on a finger? Turn left at the light, and urgent care will charge you $132 to stitch you up, or turn right and pay $1,850 at the hospital. Ouch! Without prior knowledge or price transparency, consumers remain unaware of the cost of care and can waste thousands of HSA dollars a year by overpaying for care.

With a price transparency solution like MyMedicalShopper, comparing and selecting a high-quality provider for over 10,000 unique tests and procedures is as convenient and easy as a Google search. Consumers are accustomed to shopping for everything on their phone, so why should healthcare be any different? Having real-time price and quality information helps consumers make more informed care decisions, reduce their out-of-pocket expenses, and budget for future medical expenses.  

How price transparency tools work

  • Your physician wants you to get an MRI as a result of nagging pain in your arm from playing too much dodgeball.
  • While still in the examining room, you pull up your price transparency tool on your smartphone and search for local providers.
  • In under a minute, you find multiple imaging centers in a 10-mile radius, including one that’s $1,457 less expensive than the one in the hospital your doctor recommended. 
  • You share this information with your doctor and decide that the one a mile away is just as good as the hospital, so your doctor sends you to the imaging center.
  • Congratulations, you just saved $1,457 in your HSA for a future expense and still received excellent care.

By making more informed decisions and not overpaying for healthcare, HSA users have significantly more tax-free savings for future medical expenses, including retirement.

Without price transparency, a single decision on where to go for care could waste thousands of dollars and erase a significant amount of an HSA’s balance. Give your employees a benefit that they’ll appreciate today and thank you for tomorrow.  

*Check IRS eligibility guidelines

Your employees are wasting $12.49 a day by not shopping for healthcare

Let’s face it, we’re all frustrated by increasing out-of-pocket healthcare expenses. We spend more on premiums, for less coverage, and hope that an unexpected medical claim doesn’t financially ruin us. 

Pricing in healthcare is not transparent like other markets where consumers can easily determine the price of something before they buy it. It would be like buying a car without any idea of the final cost until the bill arrives months later and you have to pay for it. And unlike a car, you can’t return your healthcare procedure or sell it elsewhere to recoup some of your money.

In a market without “transparent pricing” and price variations that exceed 1,000% on the same procedure for patients with the exact same insurance coverage, you can be sure that your employees are overpaying for common medical procedures.

Provider pricing variations by market for common medical procedures

By analyzing billions of post-adjudicated medical claims, MyMedicalShopper estimates that employees who do not use a price transparency tool to shop for care are overspending by at least $12.49 per day on healthcare in 2019. That’s an estimated $4,559 per employee per year, wasted by not shopping for routine medical procedures (e.g. blood tests, MRIs, x-rays and immunizations). For a typical company with 100 enrolled employees, that could mean a potential savings of $455,900 per year that could be otherwise invested to drive growth elsewhere.

Getting accurate medical procedure price information is not easy, which is why many in Washington are calling for increased healthcare price transparency. Secret deals between insurance carriers and medical providers are responsible for the dramatic pricing variances above and have made it nearly impossible for patients to determine a medical procedure’s price beforehand.

Without pricing information many consumers overspend on healthcare and fear “surprise bills” they can’t afford showing up months after leaving the doctor. CNBC reported that the high cost of healthcare contributes to two-thirds of personal bankruptcies. And who knows how many patients forego needed care out of fear they can’t pay for it?  This is why price transparency solutions are needed to help consumers compare pricing and quality information to find affordable care.  

Healthcare price transparency might not cure diseases, but it can cure over-charging for care and help consumers make more informed healthcare decisions.

As we wait to see what our lawmakers in D.C. are going to do to solve the problem, price transparency solutions like MyMedicalShopper give employers and employees the necessary tools to navigate healthcare marketplace pricing and make better-informed care decisions. This empowers everyone to plan for future expenses, reduce out-of-pocket medical costs, and promote access to affordable, high-quality care creating a “win-win” for both employees and employers. After all, who wouldn’t want all their employees to save $12.49 per day on their medical expenses?