In the world of healthcare, prices are often opaque. The vast, seemingly random variation in the cost of services among clinicians and hospitals has garnered media attention and prompted calls for pricing transparency.
Hospitals face steep fines if they fail to comply with pricing transparency mandates, including posting their “chargemasters” online in machine-readable files. Yet adherence to these mandates lags.
Health systems must comply with state and federal price transparency policies to avoid costly fines and the negative impact on patient trust. While implementing these new regulations can feel like a significant hurdle for some organizations, price transparency offers an opportunity to build and deepen patient trust.
Patients who understand the costs of their care are more apt to pay their bills quickly, cutting down on administrative expenses and eliminating costly collection efforts. As a result, health systems that make pricing information readily available experience greater cash flow and profitability.
Forthright price transparency provides patients with the cost of physician services, medications, and tests in an easy-to-understand format that makes it simple to compare prices among hospitals. This helps patients make better decisions about where to receive care, increasing the likelihood of a positive patient experience.
Since 2021, hospitals must publish their standard charges to reduce information asymmetries and promote price competition. However, hospitals’ data often doesn’t reflect what consumers will ultimately pay.
Patients don’t have access to the data needed to compare prices accurately and are unsure how much they should be expected to pay for certain procedures or services. This leads to fear and distrust of the healthcare system.
Hospitals aren’t ill-behaving entities that refuse to share pricing information; they have no incentive to comply with a rule working against their financial interests. Therefore, policymakers must implement effective and fair price transparency regulations rather than relying on clinicians and healthcare organizations to self-regulate.
Some consumer advocates, employers, and health plans have pushed for transparency reporting to encourage consumers to seek out high-quality, low-cost providers and promote competition based on price. Unfortunately, hospitals do not have the financial incentive to share their prices.
The key to effective pricing transparency lies in uniting the information into meaningful categories that patients can understand and use, such as episodes of care or procedures. It also requires merging the information with data on quality or outcomes to allow patients to optimally allocate healthcare resources to services and products that produce a measurable benefit.
It’s time for hospitals to reconsider their positions on price transparency and work toward compliance with state and federal transparency mandates – or face significant civil monetary penalties. The non-compliance costs are too high to ignore patient demand for price and quality transparency.
Increased Patient Satisfaction
Patient satisfaction directly impacts the quality of patient care. Patients who feel their healthcare providers meet their needs are more likely to return for future services.
Increasing price transparency in healthcare can help patients understand their financial responsibility and reduce the likelihood of surprise medical bills. Additionally, healthcare practices prioritizing discussing costs with patients and actively following up after a visit or treatment will promote a stronger patient-provider relationship.
However, not all hospital pricing transparency efforts are created equal. For example, many hospital disclosure initiatives fail to customize price information to reflect a consumer’s health insurance coverage and prices they are likely to pay (e.g., by using claims data or negotiated rates). Effective price transparency requires public policy levers to push markets toward efficiency and economy that do not depend on or presume individual clinicians’ or organizations’ self-restraint.
Some consumer advocates, employers, and health plans have been pushing for greater price transparency to encourage consumers to seek out low-cost, high-quality providers and spur competition based on value. However, evidence suggests that more than price transparency is needed to reduce costs.
Most state and hospital transparency efforts aim to disclose total prices in a consumer-friendly format or publish negotiated rates between clinicians and insurers in a machine-readable file (intended to power apps). These tools are not designed to help consumers shop for the best prices but to inform them about their out-of-pocket costs.
However, only some patients want to shop for the lowest price. They instead want trusted, actionable information that reduces their cognitive burden. Healthcare “shopping” tools address this need by providing individualized cost estimates considering the patient’s specific benefits and provider performance.