Price Transparency in Healthcare Costs

Healthcare Cost Price Transparency

You know that healthcare cost transparency is very low when patients are not aware of how they receive costs until they get their final bill. This type of situation is very rampant not only in the United States but across the world. This is why the lack of price transparency is one of the biggest causes of many negative patient experiences.

The inadequate proper price disclosure does not only cost patients money. It also puts the quality of service and products that they receive in question. This results in many people asking why healthcare costs are being out of line and why price transparency is lacking.

In this article, we will answer these questions and provide suggestions on what could be done to improve the problem.

Obstacles Preventing Price Transparency in Healthcare Systems

Why are healthcare costs rising? Well, there are three main obstacles preventing price transparency in Healthcare Systems. Here are they:

Possibility of Inflated Cost

Paying more does not necessarily provide you with a better product and service quality in the healthcare industry. Yet, the association of having a higher cost being considered equal to receiving better quality service. It is often one of the reasons why hospitals jack up their price rates. Although this does not apply to all but it has been done in several cases.

Meaningless Prices

Most of the healthcare services are not considered “shoppable.” This means the price list provided by hospitals does not necessarily apply for all types of cases. This is very true, especially in emergency medical situations.

Patients still lack comparison tools to identify how much does healthcare cost even when it is “Shoppable.” This can be the case for elective surgeries, prescription drugs, and MRIs.

Lack of Information

Many American consumers have attempted to search for the out of pocket cost for the healthcare service.  Most of these are done before availing any services or products. The same survey also showed that people with higher deductibles are more interested in knowing the cost care.

However, only limited information and resources are available to answer these questions. Even healthcare costs by country data are almost non-existent.

Is it Possible to Achieve Price Transparency in Healthcare?

In theory, yes, it is possible to achieve price transparency in healthcare. It must be a priority because it is essential in a well-functioning market.

This is possible to be achieved together with proper access to information.  Well-informed consumers are bound to have better healthcare cost analysis.

There have been several efforts in the past to push forward more price transparency in the healthcare system. One example of this effort is the provision in the Affordable Care Act (ACA). It requires healthcare facilities to publish their price list or chargemaster, to become more transparent.

However, contrary to this law’s primary goal, it had little to no effect in encouraging price transparency with hospitals. Instead of providing useful information to customers, hospitals release an overwhelming chargemaster list that is difficult for the average citizen to understand.

What Can Be Done?

Here are some suggestions on what can be done to encourage price transparency in the healthcare system:

Focused Transparency Efforts on Shoppable Products and Services

The first step into promoting price transparency is focusing the efforts on the shoppable products and services. This can be applied to diagnostic imaging and prescription drugs.  The factors can easily be identified, affecting the cost of these.

Pricing Comparison

Providing better access to pricing comparison is a good idea. It must include comprehensive data on health outcomes concerning the product and services. It must be done in a way that is easy to understand for the majority.

Using a standardized data format could be useful when doing this. It will make shopping for healthcare products and services as easy and convenient as buying a vacuum.

Making Price Transparency Information Mandatory

There should be a substantial effort on the side of the hospitals to promote price transparency. States can do this by making it mandatory for providers and physicians to provide price information directly to patients. This can help encourage better decision making about treatment options and expenses.

Provide Price Comparison Tools to the Public

The lack of a price comparison tool is a significant problem that causes inadequate price transparency. The obvious solution is to provide accessible comparison tools to the public. This can be through navigators or technologies.

Final Words

The reasons for the rising costs of healthcare are not always because of the increasing price of manufacturing. It can be due to improper pricing rampant within the industry. This issue is something that must be addressed immediately.

Although there are efforts done to discuss and eliminate the problem, it is still not enough. Better policies and information are the only ways to improve the price transparency of the healthcare system.

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Marc Freedman

To help you achieve your company's financial growth goals, Marc serves as our Chief Cost Advisor, providing advice to client management teams. He is highly regarded as an expert in his field, and he frequently collaborates with and contributes to other spend consultants to develop and implement cutting-edge strategies for their respective clients.

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