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The 4 Importance of Price Transparency in Healthcare

Benefits of price transparency in healthcare: how patients & providers get win-to-win solution.

The Price Transparency in Healthcare. In the ideal healthcare market, consumers have direct access to cost and quality information in a helpful format for purchasing. But this is far from reality for many patients.

Many hospitals have implemented transparency initiatives by making payer-negotiated rates publicly available in machine-readable formats. It is important because this information can be used by consumers with HDHPs and Health Savings Accounts to compare prices for shoppable services.

Patient Loyalty

In healthcare, patient loyalty is a big deal. Loyal patients provide a steady revenue stream and help with patient retention. They also provide referrals to grow a practice’s patient base without costly marketing expenditures.

But despite this, many health systems don’t fully understand what drives patient loyalty. They rely too much on satisfaction surveys to measure loyalty and don’t recognize that true patient loyalty isn’t just intermittent satisfaction.

It could spur hospitals to focus on price transparency in healthcare, encouraging patients to choose the services they need at a price they can afford. It would be an essential step in the shift to value-based care.

Increased Productivity

Patients can shop and compare affordable medical options with access to healthcare prices upfront. It will be especially important for those with high deductible plans or paying out-of-pocket. Consumers can find competitively priced providers and deliver the care they need at a price they can afford without sacrificing quality.

Many hospitals still need to meet price transparency requirements despite increasing fines and significant educational, monitoring, and enforcement efforts by CMS. This lack of compliance is likely because hospitals aren’t incentivized to reveal pricing information.

While the hospital price transparency mandate requires them to post machine-readable files, it is difficult for consumers to use this data because hospitals negotiate different rates for various services based on a variety of factors (such as negotiated contracts with health plans, patients’ specific needs and the complexity of bundled service episodes). Patients need complementary tools to make this information useful.

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Increased Efficiency

Price transparency is essential to avoiding surprise medical bills for patients with high deductible health plans (HDHPs) or who pay for healthcare services out-of-pocket. Providing consumers with detailed and accurate pricing information and an easy-to-use tool to compare prices, hospitals, and practices can empower patients to make informed decisions on their medical care and increase patient loyalty.

Unfortunately, despite the best intentions of recent federal and state requirements for hospitals to publish standard charges online, consumer access and use of this data still needs to be improved. This is due to the complex nature of hospital pricing information, the number of different ways it can be presented to patients, and the lack of tools that help simplify this data for everyday consumers.

Fortunately, this doesn’t mean implementing price transparency for payers and providers isn’t possible. However, leveraging technology to facilitate the process requires careful consideration of how transparency can be achieved with the most significant benefit to all stakeholders.

Better Decision-Making with Price Transparency in Healthcare

The US healthcare system relies on market forces to ration care, but these differ from the functional markets commonly recognized. Instead, the American marketplace relies on dysfunctional market behaviors: patient inertia, provider opportunism, and cost-shifting between payers, consumers, and providers.

Transparency could change these unhealthy market dynamics by allowing patients to shop for better prices and quality. The theory is that if superior providers can attract patients willing to pay more for higher efficiency and quality, lower-performing providers will have no choice but to improve.

However, adherence to hospital price transparency rules needs to be higher. The main issue is that hospitals aren’t incentivized enough to make their prices transparent. Further, the current regulations require a lot of information and are complicated to understand. To be successful, these rules need to streamline the data and simplify the tools for consumer access. Additionally, they need to focus on genuinely shoppable items, such as drugs or diagnostic imaging, and pair pricing data with corresponding quality or health outcomes data.

the 4 importance of price transparency in healthcare
Price Transparency in Healthcare

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