How much does an MRI cost, and why the range is $250 to $18,000
If you've ever wondered how much an MRI costs, the honest answer is: it depends entirely on where you walk in the door. David Berg has been tracking this number since 2008, when the range was $380 at a freestanding imaging center to $3,000 at a brand-name hospital system. Today the low end has dropped to $250 because MRI technology, like all technology, gets cheaper over time. The high end has climbed to $18,000 at private-equity-owned hospital systems that need to 4x their valuation in five years. "You don't have to be a rocket scientist to know how you solve that problem," Berg says. "You have to make available the $250 MRI and make sure people know it." The quality of the scan and the radiologist read is the same. The difference is entirely the shelf the machine sits on.
Why your insurance card is the worst way to pay for healthcare
Berg's core argument is simple and uncomfortable: the moment you present your insurance card, the system's first question is how much money it can extract from that card. "Step one for the system is who's going to pay for it. That is a bad entry point into healthcare right there," he says. The system is not designed to route you to the most appropriate or affordable option. It is designed to route you to the most profitable one. Berg grew up in Canada, where the entry point into care created peace of mind even when the care itself had limitations. When he moved to Phoenix in 1995 with his wife, a family physician, he was struck by how little peace of mind Americans had despite having access to genuinely excellent care. That gap became the problem he spent the next 30 years engineering his way out of.
How to pay less for prescriptions: the capsule vs. tablet example
The MRI example gets attention, but Berg argues the prescription drug gap is even more dramatic and affects far more people. A common generic blood pressure medication, lisinopril, costs over $3,000 a year as a capsule at a major retail pharmacy. The same drug, prescribed as a tablet at a local grocery store pharmacy, costs under $30 a year. Same condition. Same patient. Same doctor. The difference is that major retail pharmacy chains often own the insurance companies and the pharmacy benefit management companies that determine what gets reimbursed and at what price. "What if I told you that retail pharmacy also owns your insurance company?" Berg asks. "And what if I told you that retail pharmacy also owns a pharmacy benefit management company that makes more money if your doctor orders a capsule versus a tablet?" Two moves, both of which every doctor already knows, and the savings are close to $3,000 annually on a single medication.
Why healthcare is so expensive in America: a system problem, not an evil people problem
Berg is careful to distinguish between bad actors and a bad system. He used to believe the complexity was designed on purpose by people scheming in boardrooms. He no longer believes that. "It evolved this way, little by little by little," he says. "And now it's so complex that even the smartest, most capable people in the world haven't fixed it yet." The structure he describes has three layers: routine services at the bottom representing 90% of volume and less than 10% of dollars; specialists and advanced imaging in the middle; and hospital systems, big pharma, and insurance conglomerates at the top where nearly all the money concentrates. The problem is that the entry point into the system is at the top of that hierarchy, not the bottom. Fear is the mechanism that keeps it there. Without fear, people would wait, use cheaper options, and skip unnecessary procedures. With fear, especially when children are involved, they go straight to the emergency room at 11 p.m. for a sprained ankle and make a $6,000 to $10,000 decision without realizing it.
How to reduce medical bills: the Redirect Health membership model
Berg's solution is modeled on Costco. Redirect Health does not make money on healthcare services. It makes money on membership. The more unnecessary activity it eliminates, the more valuable the membership becomes. "I want to make sure that my clients pay half of what they would pay if they went to a traditional mechanism," he says. That freed-up money goes back to the entrepreneur or the employee, not to a PE firm's exit multiple. The free entry point into healthcare that Berg built in 2008 now generates over 20,000 job applicants a year for his own company, because offering free healthcare for the entire family is still rare enough to be a genuine competitive advantage. Turnover dropped. Recruiting became easy. And the model proved that peace of mind is not a luxury. It is a business strategy.
