4 Recent Events That Have Changed How Consumers View Healthcare

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As the nation places more scrutiny on transparency in healthcare, pressure for providers make clinical outcomes and prices more visible and easy-to-understand grows by the day. Where do consumers' dollars go? Why do procedures vary in cost so widely, even among hospitals in the same city? Which hospitals are really the so-called "best?"

A few studies and major reports within the past year have shined the spotlight on healthcare prices and performance. These events didn't just make waves in the healthcare industry — they crossed the threshold to the mainstream, altering the way average consumers approach their hospitals and physicians.

Here are four events that have left impressions on consumers within the past year.

1. TIME's exposé on healthcare prices. This past February, investigative journalist Steven Brill wrote a 36-page piece for TIME that probed into the many different sectors of healthcare. At the heart of the issue was not so much who should pay for healthcare. Instead, as Mr. Brill put it: "When we debate healthcare policy, we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?"

Caught in the crosshairs of the TIME piece were hospitals, specifically non-profit hospitals. Mr. Brill wrote in-depth anecdotes of various patients who received enormous bills from hospitals after injury or illness. Hospital chargemasters, which essentially list the price of every hospital procedure and service, were found to vary and had little consistency with other hospitals. For example, an angioplasty could carry a certain price tag at one hospital, and at the hospital down the road, the same procedure could cost several times more.

In addition, hospitals are generally the largest employers, bringing in hundreds of millions of dollars, or even billions, in revenue every year. The executives who run hospitals are some of the highest-paid in the healthcare industry, Mr. Brill wrote.

The article caught the attention of the masses. It spurred the American Hospital Association to create a response, which both defended the role of hospitals and called into question some of points Mr. Brill had made in his article.

However, the piece resonated with millions of healthcare consumers, some of whom have called for legislation to make hospital charges more transparent, as is the case in North Carolina. And it was only one of several events in the past year that led to further scrutiny of the U.S. healthcare system.

2. Nearly 30 states get "F" grade for healthcare price transparency laws. A March report showed the comprehensive lack of public policy and state legislation for pricing transparency — a regulatory absence many consumers may have previously assumed but further analysis affirmed.

The report, published by the Catalyst for Payment Reform and the Healthcare Incentives Improvement Institute, reviewed state-specific laws for price transparency in healthcare. Overall, the report found many states have only basic laws for prices to be made public, and in many cases, pricing information is only made available upon request.

The organizations prescribed "F" grades to 29 states, including seven that had zero laws for price transparency, and gave another seven states "D" grades. That means 72 percent of states received a "D" or "F." On the other hand, 14 states received "C" grades or better, and Massachusetts and New Hampshire were the only two states to receive "As."

To receive a positive letter grade, states needed to have laws in place that promoted the following: sharing information about the price of services for both inpatient and outpatient services; sharing price information for both physicians and hospitals; sharing data on a public website and in public reports; and allowing patients to request information prior to a hospital admission.

Although hospitals promote the value of transparency in a broad sense, this report showed there is still room for state lawmakers to support hospitals' and providers' price-sharing endeavors.  

3. Studies by the Journal of the American Medical Association on hip implant costs and postsurgical complications. Within the past two months, JAMA released two studies that received widespread coverage among the public.

In February, the journal found that obtaining price information for hip replacements, a fairly standardized procedure, is difficult to find. And when hip replacement prices are found, there is significant variance among hospitals. Researchers concluded that patients looking for hip replacements might be better served to conduct comparison shopping, just as if they were shopping at a retail store — a concept that is picking up steam under healthcare reform.

This month, JAMA researchers also discovered that hospitals record higher revenues and profits when patients incur postsurgical complications. Patients with complications naturally have to stay at hospitals for longer periods, which also cost hospitals more, but the resulting reimbursement from private payors, Medicare and Medicaid generally pumped up hospitals' bottom lines. Researchers reiterated that they do not believe hospitals actively have this as part of their financial strategy, but it reintroduces some inherent flaws associated with fee-for-service.

Both JAMA studies dig into different aspects of consumer-driven healthcare: The first shows consumers desire easy-to-find information for healthcare procedures, at least elective ones, but the hospital industry is not quite there yet. The second reinforces an idea that consumers have championed since the signing of the Patient Protection and Affordable Care Act — that providers should be paid based on the quality of care they provide to their patients.

4. U.S. News & World Report's increased focus on performance, rather than reputation, in hospital rankings. Last July, U.S. News & World Report released its list of the best hospitals in America, an annual and consumer-trusted ranking it has released each year since 1990. But the 2012 list was devised a bit differently, with less emphasis on hospitals' reputation and more focus on performance.

The shift in the listing methodology suggests the heightened focus on outcomes and performance measures it not merely restricted to payors and quality-based reimbursement. These objectives are making their way onto consumers' radars as well, as mainstream resources like U.S. News increasingly factor federal, clinical data into hospital rankings.  

The media outlet based rankings entirely on reputation when it began publishing the Best Hospitals lists, factoring in some objective measures like mortality in 1993. The past year marked U.S. News' big push to incorporate more clinical information to the lists: For 12 of the 16 specialties in the latest edition of the list, reputation accounted for only 32.5 percent of the scoring process.

To arrive at this score, 200 physicians per specialty are randomly selected and asked to name hospitals they consider best in their respective specialty. U.S. News then bases reputational scores on the combined results of three years of surveys to reduce the tendency of different physicians' perspectives skewing the rankings.   

U.S. News also took extra precautions to reduce the likelihood that hospitals with the most physician nominations would bob to the top of the charts. Many of 2012's top contenders remained familiar, but there were some subtle shifts. Most noticeably, Johns Hopkins Hospital in Baltimore fell from its number one post to second place — the first time it lost the top spot in 21 years. Massachusetts General Hospital in Boston replaced it. The media outlet said some hospitals that made it to the top may not have any reputational score at all — their inclusion was based wholly on clinical performance.

More Articles on Consumers and Healthcare:

Survey: Patient Satisfaction at Two-Decade High

Will Hospital Price Transparency Drive Up Healthcare Costs?

Study: Healthcare Reviews, Ratings Increasingly Impact Hospitals' Bottom Lines


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