To be or not to be...transparent, that is. Health care cost transparency is currently a hot topic in both the health care industry and in policy conversations. Proponents of transparency have been advocating for years, but a greater push for publicizing medical service fees stems from President Trump’s Executive Order issued late last month. The mandate calls for health care delivery organizations, primarily hospitals, to make their costs available to patients, both online, and in-person. There is both overwhelming support, and vehement opposition to the issue. We examine the why of the matter - and what the shift could mean for patients.
The Pro-Transparency Perspective
Those backing the transparency clause believe that making fees public knowledge will inform and empower patients, thus improving patient experience. Furthermore, by increasing the awareness of competitive hospital prices, consumers will theoretically opt for the most affordable, high-quality care. Patients will know the cost of an expensive surgery before it happens, and can shop among the hospitals or ASCs near them for better rates. To compete, higher-priced hospitals would have to lower costs to put themselves in the mix for those consumers who are “shopping” around for their care. Being both accessible in service, and in cost, will reward transparent organizations’ reputations.
Additionally, this could have positive implications in terms of access to care for lower-income patients. Delaying care, or evading it entirely, is not uncommon for patients who believe they cannot afford needed services. Seeing prices in advance may increase patient access. It could point such patients specifically to seek care that isn’t enormously costly, to know how much money they need to save or borrow to pay for the care they are seeing, or to work with their providers for payment or financing solutions.
It’s not a surprise to anyone observing patients’ health care experience that the lack of transparency that currently exists poses enormous problems for patients across the U.S.. For instance, patients in the Los Angeles area who receive IV fluid during their hospitalization, could face drastically different costs for service depending on their hospital and insurance plan. At Children’s Hospital of Los Angeles, one liter of IV fluid is $146, whereas at Cedars-Sinai Medical Center it’s $383. Similarly, the price of a common blood test can range anywhere from $11.00 to nearly $1,000. In fact, the New York Times reports that within the state of Florida, “the most expensive blood test costs 40 times as much as the least expensive one.” This variance is due to closed-door discussions between providers and insurance companies on price deals. And more often than not, patients don’t have any idea of what their insurer agreed to until after the blood test, and receiving the bill.
Does a little mystery go a long way?
However, some experts are questioning whether or not posting prices will curb skyrocketing health care costs. According to the Wall Street Journal, transparency could “remove an incentive for a hospital to offer select insurers a discount for fear others will want it.” Moreover, AHA President and CEO Rick Pollack explains that these policies could have adverse effects, “Publicly posting privately negotiated rates could, in fact, undermine the competitive forces of private market dynamics, and result in increased prices.”
And even beyond the clear consideration of price changes, this could mean more change in provider workflow. Many providers do not know the cost of the services they provide. Ohio Hospital Association’s legal counsel, Sean McGlone clarifies, “Having to call an insurer for the patient’s coverage information at the time of the patient’s appointment would lead to long delays in care.” Not only could it lead to delays, but an increase in the kind of work that contributes to physician burnout. It’s possible that more staff might even be needed to specifically cover this task. Regardless of particular staffing mechanics, price transparency cannot happen successfully without physician input. It could be about using some applications that help patients shop for prices but if we were betting people we’d stay tuned for the next conference where the workshop helps physicians handle conversations with patients who want to travel to Canada or Mexico to pick up their medication.
Ahead of the Game
Maybe the best existing evidence of what happens when health care costs are made public can be examined through the state of New Hampshire, which has had over a decade of transparency policies under its belt. While hospital websites display pricing for numerous services, the number of patients who actually view these pages and use price calculators is tiny - maybe as little as 8%. There’s a general lack of awareness that these calculators exist and that these organizations websites’ post about procedures and service costs. For this reason, the anticipated decrease in prices across the state wasn’t quite as projected - the motivation to lower prices due to competition was minimal. With respect to publicly posted prices, there was also some confusion on the side of the organizations as to which prices should be posted, because so often health care bills include several, if not dozens, of separate charges.
Due to the White House’s role in revising health policy, the shift to transparency may be possible. However, the actual implementation of the policy and subsequent aftershocks will be critical to follow to see how it affects patients’ access to care, and how providers train their teams to have conversations about price upfront that don’t diminish patient experience. If you oversee patient experience, you should be watching this space closely.
Sources & Further Reading
“Achieving transparency in healthcare.” Retrieved 7/18/19.
“One State’s Effort to Publicize Hospital Prices Brings Mixed Results.” Wall Street Journal. Retrieved 7/16/19.
“They Want It to Be Secret: How a Common Blood Test Can Cost $11 or Almost $1,000.” Retrieved 7/22/19.
“Transparent Hospital Pricing Exposes Wild Fluctuation, Even Within Miles.” Kaiser Health News. Retrieved 7/16/19.
“Will Price Transparency in Health Care Lower Costs or Backfire?” Retrieved 7/18/19.