Shining a light on Price Transparency in Healthcare?
While a healthcare treatment experience in the United States is as expensive as fine crystal, it is nowhere near as transparent. And when exorbitant and confusing bills mount, patients can develop negative sentiments toward the hospital or providers.
Justin Irizarry is the Co-Founder and CFO of OrthoNOW, the nation’s only network of orthopedic immediate healthcare franchise centers. He says, “There is a public groundswell of discontent with the status quo in healthcare pricing. As patients become more actively involved in lobbying their representatives and find that there are more healthcare options than ever, they are beginning to demand transparency. It’s like a big lightbulb has been illuminated and people are saying, ‘Wait. We shop for everything else. Why can’t we shop around for healthcare? What about those healthcare franchises we see everywhere?’”
The formidable-sounding “charge master” is the godfather of treatment costs, containing a comprehensive itemization of all services that are billable to patients or their insurance companies.
“Although wide-ranging in nature,” says Irizarry, “in reality, the charge master has little impact on the cost that patients or their insurance companies pay. It has been determined that most providers use a multiple (3-6x) of Medicare rates to determine their charge master prices. But things are still a bit loose, however, as there exist virtually no regulations governing how much a provider can charge a patient for a specific service.
“We also know that providers are not basing rates on their costs or on the value they provide. Add to this the fact that charge masters vary widely among providers, even within the same geographic area, and you have a glimpse of why patients are so confused.”
But there are barriers to price transparency.
Political action committees
According to Irizarry, many groups, including the American Hospital Association, have actively opposed state transparency legislation.
And don’t look for the courts to always come down on the side of the patient. Irizarry says, in 2015, the Supreme Court (Gobeille v. Liberty Mutual) ruled that self-insured companies do not have to turn over their healthcare payment information.
Differing definitions of transparency
“We do have a watchdog-type entity that distinguishes between states with effective and non-effective price transparency initiatives — The Catalyst for Payment Reform and the Health Care Incentives Improvement Institute (“the Institute”),” says Irizarry. “Unfortunately, it has been found that most states aren’t doing a great job of transparency, and indeed have earned a ‘D’ or an ‘F” on the Institute’s report card.”
But, according to Irizarry, Florida is different. “After receiving an ‘F’ from the Institute, Florida then enacted strong consumer protection laws in April 2016. In addition, the state mandates that urgent care companies post the prices of many of their most common services.”
But are patients shopping?
“Interestingly, those patients given a chance to price shop for healthcare services aren’t jumping at the chance. We know, for example, that only 20 percent of patients use cost calculators when given the opportunity; price transparency has not reduced patient spending and only 2 percent of health plan users refer to pricing information,” says Irizarry.
So, what’s going on?
“Some of this is because most families are able to meet their deductibles… and many services are not ‘shoppable.’ Also, patients feel pretty wedded to brand perception and indeed think that higher prices mean better services,” says Irizarry. “In addition, patients may know to shop around for an individual doctor’s costs, but they don’t round that out with shopping for hospital costs, etc. And many don’t know that healthcare franchises are a viable option for quality care.”
Those who do want to shop for healthcare, however, will have their best luck when it comes to non-emergent services. “Patients can be successful if shopping for services such as imaging, physical therapy, biopsies, pathology, most urgent care, colonoscopies, endoscopies, vaccinations, dialysis and even medication management of chronic diseases, such as diabetes and hypertension,” says Irizarry.
And what do providers need to do, according to Irizarry?
“Healthcare facilities, including franchises, need to realize that patients will not only shop on price. People also want to know that they will receive high-quality treatment at a reputable facility. Providers need to think long-term to compete; they need to bring something to the table that the other facilities do not. They need to provide extreme transparency coupled with high value and ease of use.”
Because going for medical treatment should be like walking into a nice, well-lit room rather than running an obstacle course at night.