How health systems across the US are improving price transparency

Physician organizations, hospitals and health systems are under increasing pressure to deliver transparent, competitive pricing.

This pressure is coming from multiple sources, according to Igor Belokrinitsky, principal with Strategy&, PricewaterhouseCoopers' strategy consulting business, and with PwC US. Federal and state governments are demanding more transparency, while consumers are asking for more affordable healthcare options. Additionally, payers are working on improving member engagement to keep members out of hospitals. These efforts include getting more members to utilize retail health clinics and telemedicine options rather than hospital emergency departments.

As a result, some business is being diverted away from hospitals and toward retail clinics, standalone surgical centers and urgent care facilities that advertise their prices and services, according to a new report from PwC's Health Research Institute.

"The percentage of the [commercially insured] population that creates profitability for hospitals and health systems is getting smaller and smaller so the competition for that population is heating up," says Mr. Belokrinitsky."To compete for that population, hospitals are finding they have to be more consumer friendly. They have to be more accessible because the expectations [have] been set by other industries in terms of 24/7, on demand, always-on access."

Given this trend, some hospitals are examining ways to incorporate clear pricing strategies to compete for consumers. This may include offering money-back guarantees, like Danville, Pa.-based Geisinger Health System, or pricing tools, among other things.

Here are four examples from PwC's report of hospitals and health systems examining ways to incorporate clear pricing strategies to compete for consumers.

Adventist Health System (Altamonte Springs, Fla.). Several years ago, Adventist began to explore how it could adjust its prices and reduce the charge-to-cost ratios in its chargemaster, according to PwC. The health system specifically targeted service areas where it saw increasing competition, including hospital-based rehabilitative services and outpatient laboratory work. After analyzing its prices compared to others in the community, Adventist, using a benchmark, looked at its chargemaster to identify which services drove revenue for the hospital and which prices could be reduced, according to PwC. The firm said Adventist found it would lose annual revenues between $50 million and $75 million by reducing chargemaster prices for certain procedures. But Adventist stayed with the approach and plans to incrementally absorb those losses , according to PwC.

Integris Health (Oklahoma City). Integris developed a pricing tool in 2003. Through the tool, patients may obtain pricing information on various procedures and services. Overall, the tool offers 240,000 price estimates for outpatient procedures each year, according to PwC, noting that the tool also links consumers to financial planners before, during and after their visits. So far, the tool is proving beneficial for Integris, PwC said.For instance, it has helped the system improve communications with its customers, according to PwC. And, due to the accuracy of price quotes, the health system has received assistance with steering patients to lower-cost clinicians that are still part of Integris. The health system also experienced financial success due to the tool, going from $1 million in point-of-service collections in 2008 to $18 million in 2015, according to PwC.

St. Clair Hospital (Pittsburgh). At St. Clair Hospital, leaders decided to work on how best to communicate out-of-pocket costs to consumers, PwC said. These efforts included listening sessions with former patients and their families. As a result, the independent hospital this year unveiled an online tool that allows individuals to receive estimates for 105 different procedures, PwC said. Since the tool went live, the hospital fields about 100 estimates each week, Richard Chesnos, senior vice president and CFO at St. Clair Hospital, said in the firm's report. Previously, the number of people asking for an estimate was around six. The website takes into account various factors, including insurance status. Prices shown are not at the gross charge amount but show the out-of-pocket amount and incorporate discounts for paying at the point-of-service.

Geisinger Health System (Danville, Pa.). Geisinger offers consumers price quotes, a one-stop web portal for patient information and a single hospital bill as part of its Proven Experience program, according to PwC. And, under the initiative — led by new President and CEO David Feinberg, MD, and piloted last year — patients can request refunds if they are dissatisfied with their hospital experience. Patients can seek as little as $1 back, or the entire amount of their co-pay or deductible up to $2,000. Geisinger pays the refund request in three to five business days. Since adopting its Proven Experience program last year, Geisinger has given back about $120,000 in patient balances, Barbara Tapscott, vice president of revenue management at the health system, said at the 2016 annual Healthcare Financial Management Association conference, according to PwC.

 

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