Why price transparency matters for health care

by Loren Bonner, DOTmed News Online Editor | May 20, 2014

Although the above have been barriers in the past, the health care ecosystem is changing — consumers are more curious about the cost of health care, the world is more web-savvy, and insurers are spending massive amounts on technologies that will allow for the necessary integration and reporting to provide on-demand transparency.

DMN: Why do providers and health care organizations need to start thinking about price transparency?

WH: I do think providers and health care organizations have been thinking about price transparency for some time; however, thinking is not doing. Given the recent legislation and overall consumerism trends, those organizations who don't prepare for and eventually provide transparency will not be trusted and will therefore lose market share. The business to consumer trend will not slow down; now that consumers can conduct these data comparisons in other markets — banking, travel, property and casualty insurance — they expect and will eventually demand it for health care.

Given that health care is an entirely unique service, it will be a difficult and transformative process. If organizations don't start not only planning, but also implementing the necessary processes and technology to provide transparency, they will be left behind.

DMN: What kind of outside pressure do they face today to get on board with price transparency?

WH: The primary pressure is going to come from competitors; the organizations that provide transparency first will attract and retain consumers. Along with competition is the change mandated by legislation that requires health organizations to have accessible data on an individual patient level. Since systems have traditionally been built and configured on a group- and policy-based way of doing business, this is no small change. Call centers will begin being overwhelmed with direct calls from members as more and more individual policies are sold. Increased call volume and phone time is expensive and will hurt medical loss ratios, public perception, and member retention — not to mention employee morale.

DMN: What would be some areas where knowing the price of a medical test or procedure would be beneficial?

WH: An obvious area of knowing test prices is imaging (e.g. CT scans, MRIs), since they can vary widely from facility to facility. Another would be the cost of a prescription (e.g. compared to the generic).

To turn this question around, I don't know what area would not benefit from having a price associated with it — everything should have a price. Consumers need to have cost information to make educated decisions on their treatment plan, to avoid unnecessary tests and procedures, and at a minimum understand the options available to them. This, of course, is dependent on a physician who can communicate the advantages and disadvantages of pursuing a particular path — with that information consumers can decide what is best for them.

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