Will President Trump’s Executive Order to force greater pricing transparency prevail?

If it survives legal challenges, will it drive more people to shop for health care based on price and not reputation (brand)? And, will it reduce the overall cost of health care?

Some believe this actually could drive-up prices for most services.

Consumers can’t make sense of hospital pricing because of third party involvement in the value transaction, yet few want to purchase health care services as a self-pay patient.

Two unavoidable realities handicap this effort to force greater consumerism and pricing transparency.

First, insurer contracts with providers have a Non-Disclosure component that is legal and ultimately would have to be overturned by the Court to force compliance.

Second, over 100 million Americans obtain their health care coverage through their employer and are happy with it.

Cost is not a concern or driver of their decision to select a physician or hospital. Instead, they “buy” health care services based on their primary care physician’s recommendation, physician and hospital reputation (brand), or recommendation from someone they trust.

There is little incentive to choose a provider solely based on price.

Small business owners who purchase insurance in the market have more incentive to shop given the high deductibles most plans have. Nevertheless, brand is still a major factor in making a decision for a surgery, cancer care, or serious illness.

Is there a better way to provide greater pricing transparency? Yes, begin to reconfigure the charge master.

Start by reducing charges and contractual allowances strategically based on acuity, utilization, and cost, and use a consistent mark-up that reflects market rates and hospital positioning.

This will tighten the all-important ratio of costs-to-charges (the RCC) and once again make the charge master a true revenue-generator.

Also, make sure you use a proven algorithm to do this to ensure you preserve the net revenue stream and set-up new net revenue growth in select service lines.

This will make your charge master more rational and charges more defensible, and it will enhance your patient engagement program’s effectiveness.

We can help.

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