The gurus say the Age of Pricing Transparency is here. CMS has mandated all hospitals post what they will accept as payment for select services. This is designed to incite consumers to comparison-shop before choosing a hospital provider and to trigger greater competition among hospitals, resulting in lower prices for health care services overall.
It is textbook consumerism to try to bend the cost curve of health, including Medicare, and reduce health care’s percentage of the GDP.
A majority of consumers have third party insurance that covers almost all of the cost of a surgery, inpatient stay, or ED visit. As a result, they make their buying decision based on hospital brand, physician reputation, and convenience.
Brand strength and consumer awareness (reach) matter more now than ever. This is why more hospital providers implement strategies to enhance their brand strength, reach, and physician alignment. We do this as part of our Strategic Advisory.
Those who are self-employed or have skinny insurance have much larger deductibles than most consumers. They are naturally more interested in the total cost of a service, however most of these consumers still consider hospital ranking, physician rating, and local reputation.
Some insurers have created tiered reimbursement levels in an attempt to drive more patients to specific hospitals. Ostensibly, this is based on insurer data by provider patient outcomes, yet we know there are several elements that determine patient outcomes.
As an example, university medical centers typically are high volume providers with a larger percentage of “more difficult” cases. This can easily skew patient outcomes.
Hospitals that place a cost estimator on their website report positive feedback from patients and an increase in their business. This confirms there is a subset of consumers out there who value greater pricing transparency, however brand strength often is the initial interest-driver.
What does pricing transparency mean? Is there a way to deliver meaningful pricing transparency that impacts all services?
We use our strategic pricing module to eliminate highly inflated contractual allowances which distort billing, often confuse the consumer, and can affect patient loyalty. This begins to restore the ratio of costs-to-charges (the RCC), delivering rational and defensible pricing, two essentials to pricing transparency.
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