As out-of-pocket expenses for medical care continue to rise for consumers, the need for hospitals to become as transparent as possible with pricing is more important than ever. Clearly, consumers should have greater access to what their treatment will cost so they can evaluate their options and make the best, most cost-effective decision.
But is this happening? Do consumers shop around for the best price when their health is at stake?
A recent Harvard Medical School study showed patients with access to a price transparency tool spent the same amount of money on their outpatient care as those who did not have the information. The study, which involved outpatient care for 149,000 employees at two national companies in 2011 and 2012, found that only 10 percent used the tool.
The Organization for Economic Co-operation and Development Health at a Glance 2015 edition reports that the US spends more than any economically developed country on healthcare because of, in part, the “highly fragmented nature of the health system.” There is a lot of waste within the US healthcare system in the United States, consumers have no real understanding of what they are spending and they are not taking advantage of the tools available to lower their spending.
It Starts with Perception
Even though there is no evidence that higher prices translate into higher quality, many consumers still believe this to be true. In a survey published by Health Affairs, a journal of health policy research, most of the people who had compared pricing believed price and quality were associated. Thus, the challenge for healthcare providers is to train consumers to understand pricing and how it relates to quality, and to educate them on how best to compare the medical services being offered.
Price transparency was designed to give consumers more control of their spending and, by extension, lower overall healthcare spending. The Harvard Medical School study revealed a need for healthcare providers to find better ways to engage consumers to research medical costs.
“We’re trying to change a culture here,” said Barbara Anthony, a senior fellow in healthcare at the Pioneer Institute, a non-profit think tank, in an article by the Boston Globe . “You don’t do that by saying, ‘Here’s a site, go use it.’” According to Anthony, insurers need to “double down their efforts to motivate consumers to choose high-value, low-priced services.”
In an article that appeared in the American Medical Association’s AMA Journal of Ethics, a key tie of cost to quality would be to tailor payments to decision-making entities (clinicians or health care organizations) based on outcome measures. Increased adoption of value-based purchasing practices and the creation of accountable care organizations, which tie reimbursements to quality metrics, are examples of this.
Transparency Tools Made Easy
Hospitals can make price transparency tools more user-friendly through mobile apps, text messages and emails that encourage consumers to take advantage of the pricing resources. An immediate reward such as a gift card for using a pricing tool is another good idea.
Insurance companies and healthcare facilities can work together to create tangible benefits that will drive consumers to research medical costs. It works. For example, in another study by Health Affairs, patients given a price transparency tool generally choose less expensive options when selecting an MRI provider.
Educate and Build Loyalty
Consumers obviously want to reduce their out-of-pocket expenses and the best way to achieve that goal is to have the ability to shop and compare when considering a medical procedure. Healthcare providers that enable consumers to do that through pricing transparency that is quick and easy will gain consumer trust. You may not always be the least expensive, but if you can explain why, you will gain consumer respect and a new patient.
By engaging and educating consumers from start to finish with detailed pricing and data, patient satisfaction is enhanced and loyalty is built.