Employer and employee health care costs have more than doubled in the last 10 years, according to the Milliman Medical Index. 

There are many examples and theories used to explain this increase, but I believe unknown prices are the root cause of the exponential growth in health care costs. 

This is ironic because you never would purchase a product or service willingly in any other consumer setting without knowing the cost upfront. Why is health care any different?

Have you ever tried to find out how much it would cost you to walk into your primary care doctor’s office and pay cash for a physical? If you have insurance, you probably never have. Instead, you had the physical—maybe paying a copay at the office—and then weeks later, you received an explanation of benefits from the insurance company and a bill from the physician. Then you reconciled what you owed, if anything, from these two documents. But there was very likely never a clear fee, like a price tag you’d see at an actual store. 

Another example of unknown pricing takes place with imaging services. A commonly used example is an MRI. It’s not unusual for two similar imaging providers in the same region to charge drastically different prices for an MRI. These variations in pricing inflate the cost to the system and create surprises for the consumer.

When the price for services becomes visible at the time of purchase, the following happens: Prices become rational. Consumers spend better. Employers can manage their risk better. Providers can collect payment at the point of sale.

To start, let’s address rational prices. When the allergy drug Claritin was covered by insurance companies, the cost of the prescription was more than $2 per pill. But when this drug became available over the counter, the price dropped to about $1 per pill. A more rational market price was set as pharmacies and retailers competed for consumers who wanted to purchase Claritin.

When it comes to teaching consumers how to spend better, the focus has been on transparency tools, which are proliferating within insurance companies. However, consumer usage of these tools is still low. Transparency is an important part of empowering consumers to become decision-makers about their health care needs, but we need to take it to the next level. We can provide price and quality transparency but in a way consumers can take action—by giving them the ability to purchase health care services directly. 

This is what we’re offering at SpendWell Health, an e-commerce marketplace that enables a consumer to purchase routine health services at buy-now prices directly from providers. SpendWell was named a “Cool Vendor” recently by analyst firm Gartner.

SpendWell launched last February with a clear vision: To transform the way people shop and pay for health care services. The old-school way we pay for health care isn’t working, so to change the picture, we must view health care with a retail lens. 

I like to think of SpendWell as the Expedia of purchasing health care because it’s as simple to shop, compare, and buy, which eliminates surprises for consumers, contains costs for employers, and helps secure payments for providers. 

The organization’s mission is to transform how people shop and pay for health care by being the easy-to-use, e-commerce marketplace where routine services are purchased at buy-now prices.

This year, nearly a third of large employers only offer high-deductible health plans, which means employees are increasingly self-insuring under their deductibles. By providing employees with a simple way to shop and purchase routine care such as physicals, mammograms, physical therapy and more, they take control of their health care dollars. 

Until recently, prices for health care services have been hidden behind negotiated rates, cash-pay discounts, and the perception that “higher quality” care costs more. So how do we get to the point where prices are out in the open? Enter retail-based health care. 

Imagine being able to schedule that physical you need online at a pre-determined price with your preferred provider. If you don’t like the price your provider offers, you can look for someone else who is conveniently located, has patient reviews that reflect quality, and offers a price you consider fair. 

You can pay upfront for your service to avoid surprises and then have the service details communicated back to your insurance company so you receive credit toward your deductible.

This kind of retail model is the future of the health care business, and in the first four months of SpendWell’s pilot, we found that providers often compete for their patients by offering services at costs up to 20 percent lower than their negotiated fee schedule.

The retail model is already emerging in new models of care delivery that embrace standard retail principles, such as cost, quality, access, convenience, and loyalty.  

Examples of services that appear to embrace retail principles include telehealth, on-demand virtual care; retail clinics, and on-demand brick-and-mortar practices; concierge practices, which offer subscription-based primary care; and e-commerce markeplaces, such as SpendWell. 

Retail-based health care also benefits providers who struggle with revenue cycle management. According to McKinsey on Payment, 15 cents of every dollar spent on health care is lost on claims processing, payments, billing revenue cycle management, and bad debt. 

But in a retail-based system, providers get paid the price they’ve set and don’t have to chase claims payments. It saves time and money in the long run and enables them to focus on the care they’re delivering rather than the bills getting paid. This swing will boost quality in health care.

When employees do the shopping and purchasing, employers are free from the administrative burdens imposed by health plans. With choice and control at their fingertips, most employees can meet all their health care needs before company cost-sharing kicks in.

 Self-funded employers can use their money how they want and make changes across the board, including eliminating negotiated rates, claims, EOBs and traditional provider payments.

At the end of the day, employers can save when they give their employees access to an open marketplace like SpendWell, where providers compete for business and employees can make informed choices. The health care system as it stands is still unsustainable. Bringing an open e-commerce marketplace to health care has the potential to transform the system to make it affordable. 

Marcee Chmait is president of SpendWell Health, a Portland-based e-commerce marketplace where employees on high-deductible health plans can shop and buy health care services directly from providers.