Perspectives

Building Castles on Quicksand: Why Transparency Alone Won’t Save American Healthcare

By Will Herling, Chief Executive Officer

Introduction

Mark Cuban has done something few healthcare insiders have managed to do in decades: he has made the supply chain a dinner table conversation. With Cost Plus Drugs, he effectively bypassed the opaque intermediaries of the pharmaceutical world, proving that when you strip away the middlemen, the price of generic medication drops to pennies on the dollar. For this, he deserves applause. He is asking the right questions and demanding the one thing the industry has fought tooth and nail to hide: transparency.

However, as we watch the public rally around these ideas, we must be careful not to mistake a clear view of the problem for a solution to it.

While I agree with Cuban that transparency is non-negotiable, his current approach (and the public sentiment following it) misses a critical reality. American healthcare is not simply a retail market waiting for a “direct-to-consumer” disruption. It is a complex ecosystem of risk financing, misaligned incentives, and regulatory hurdles. To believe that we can solve the healthcare crisis simply by showing people the price and letting them pay cash is to build a castle on quicksand.

The Myth of the Cash-Pay Consumer

Cuban’s model, and the broader “market-based” movement, relies heavily on the idea that if we just post the prices, consumers will shop, competition will kick in, and costs will drop. This works wonderfully for a $12 prescription or perhaps a $100 MRI.

But this logic collapses when applied to the reality of the American patient. The uncomfortable truth is that nearly 30% of Americans are “functionally uninsured.” They may carry an insurance card, but they are saddled with deductibles ranging from $3,000 to $7,000, amounts that exceed their total liquid savings. For these families, the “market” is broken before they even enter it. If a transparent price for a surgery is $15,000, it doesn’t matter if that is a “good deal” compared to the hospital chargemaster rate of $50,000. They cannot pay it.

The notion that Americans can simply “go to the doctor, get charged, and pay” is an unrealistic fantasy for the vast majority of the population facing anything more serious than a sinus infection. Transparency without affordability isn’t empowerment; it’s just a clearer view of the disaster.

The “Unit of Purchase” Problem

The deeper issue, the one that Cuban’s model has not yet addressed, is that we are still transacting on the wrong foundation. We are trying to discount the inputs of healthcare rather than fixing the outputs.

Currently, we buy healthcare in fragmented widgets. We pay for a consult. Then a lab test. Then a facility fee. Then an anesthesiologist. Then a follow-up. Cuban’s approach effectively discounts the price of the individual widgets. But making the widgets cheaper doesn’t stop the system from selling you too many of them, nor does it guarantee they will be assembled into a cure.

To truly restructure the system, we must attack three specific structural failures:

• Unit Cost: Yes, prices are too high. Transparency helps here, but only at the margins.
• Unit of Purchase: This is the smoking gun. We must stop paying for “activity” (Fee-For-Service) and start paying for “results” (Episodes of Care). When you buy a car, you don’t negotiate the price of the spark plugs separately from the steering wheel. You buy a functioning vehicle. In healthcare, we must move to a model where we purchase a “healed knee” or a “managed pregnancy” at a fixed, transparent price.
• Wiping Out the “Tail”: The cost variance in healthcare is absurd. The same procedure can cost $20,000 at one hospital and $120,000 at another across town, often with worse outcomes at the higher price point. This “tail” of high cost and low efficiency is where the system bleeds.

Functional Transparency vs. “Posted Prices”

Transparency is only a tool if it is functional for the consumer. Posting a list of prices for 500 different medical codes is not functional; it is noise. Functional transparency means giving a patient a single, bundled price for their problem, guaranteed. It means saying, “We will fix your hernia for $4,500, all-in.” Until we restructure the unit of purchase to match how humans actually experience illness, transparency remains an academic exercise.

The Foundation is Flawed

Mark Cuban is right that the status quo is unacceptable. He is right that the opacity of the system is criminal. But we must be wary of solutions that suggest we can fix healthcare without fixing insurance.

If we do not address the fact that a third of our country cannot afford a $1,000 emergency, and if we do not restructure the very way we buy medical care (moving from paying for volume to paying for value) we are simply rearranging deck chairs.

We need a complete restructuring of the system. We need to create a market where efficiency is rewarded, where the “tail” of unjustifiable costs is cut off, and where the financial risk is managed intelligently, not just dumped on families who can’t afford it. Anything less is just folly, building high hopes on a foundation that cannot hold them.