In fact, a recent study found that 56 percent of consumers have tried to access data to make determinations about their out-of-pocket costs before getting medical care. Simply put, it is no longer “business as usual” in the fee-for-service world; patients expect to have information at their fingertips.
Consequently, forward-thinking hospitals and health systems are contemplating the best infrastructures and strategies to achieve the industry’s Triple Aim goals of improved population health, better patient experiences and lower costs. Pricing transparency—when done correctly—can go a long way towards laying the right foundation for Triple Aim alignment.
From a big picture perspective, pricing transparency helps consumers shop for and evaluate the value of the care they are getting. In addition to setting expectations, this elevates their experience, as well as their ability to evaluate clinical options to improve outcomes. For example, more visibility into various “value propositions” might allow a consumer to make informed comparisons about whether it makes more sense to receive care at an academic medical center or an outpatient surgery center. Health shopping and price transparency simplifies the choice.
And it is not necessarily all about the lowest cost of care; it is about quality, too. Most consumers may be willing to pay more if the end result is a better outcome and better experience.
While some hospitals and health systems may be ready to embrace the idea of price transparency, there are some aspects that need to change before true transparency can be realized. Technology—a critical component for leveraging needed data—is still catching up to the fee-for-value world. Not all pricing tools are advanced enough to address the nuances of new care delivery models, and most times, price does not communicate true “value.” For example, a hospital may want to communicate the fact that patients get twice the clinical efficacy for five percent more cost. However, without a data analytics infrastructure to interpret information at this level and an engagement platform to communicate it to patients, costs may be interpreted simply as “higher.”
A philosophical paradigm shift must occur that changes the way hospitals and health systems interact with patients about price. Healthcare organizations will have to think more like retail industries when it comes to price transparency as the industry moves from fee-for-service to fee-for-value.
Price Transparency within Evolving Paradigms
As value-based care models continue to mature, healthcare is essentially operating within three fundamental pricing models.
1. The fee-for-service world offers pricing that is truly à la carte: Patients pay for each episode of care whether it be a hospital stay, specialty consult, laboratory test or other service.
2. Bundled payment initiatives have introduced an intermediate step as the industry moves closer to true “fee-for-value.” Within these frameworks, patients and payers pay a pre-determined fee for a defined episode of care, and they gain more insight into the greater value proposition of all the costs together. In turn, providers have more power to customize and package care plans based on patient needs.
3. True fee-for-value operates as a capitated arrangement that is all-inclusive, requiring providers to view price through a preventative, proactive lens.
As the shift toward true fee-for-value takes place, the onus around price and interaction moves from the patient to the provider, requiring more customized, patient-centered strategies. And, providers have greater incentive to make sure patients follow through with care plans. For example, a provider might decide that purchasing an app to offer appointment reminders at a cost of $12/month is the best choice for a younger patient. Alternatively, a provider might recognize that an older patient who is not as engaged in digital technology would benefit more from phone call reminders—potentially requiring higher resource costs.
Pricing transparency strategies become increasingly important as fee-for-value evolves because hospitals and health systems need to communicate the cost of customized patient care. Many of today’s healthcare organizations lack the technological infrastructure needed to deliver critical pricing information to extended care teams and decision makers. Providers by and large are skilled at discussing clinical concerns with patients, but have received limited to no training on discussing financial implications. For example, providers often struggle with patient discussions about fertility treatments because most do not know how fertility treatment options are covered by payers. Price transparency tools can help patients and providers with these issues.
Maturing Pricing Transparency Strategies
Hospitals and health systems can take some key steps now to lay a foundation that will enhance interactions about price and value:
Understand variations are across payer contracts
Before care teams can have intelligent and informed discussions about price, it is critical to understand their own variations around episodic care. One way is to know the price points for different clinical decisions for their top five payers.
Understand what competitors are doing
While competition plays a much larger role in the outpatient setting, it is still important that hospitals and health systems understand how their pricing compares to the competition and where they fit in the market (e.g., high-cost academic medical center or low-cost community option).
Understand how their internal technology connects to the broader healthcare ecosystem
Hospitals and health systems must be paired with vendors positioned for the future of fee-for-value. Questions should be posed about how a vendor can partner with an organization to have better conversations with its patients about price and even preventive services.
Consider how to best coordinate care
When patients struggle through the new fee-for-value world, it impacts the provider’s bottom line. As a result, providers must consider the most effective holistic approach to patient care.
Integrate financial data into the clinical workflow
In order to fully leverage the opportunities of pricing transparency, new tools must be used to integrate needed data into clinician workflows. Then, care teams can be empowered to explain the value of care in terms of costs and outcomes, in order to achieve patient behavior modification and to guide patients to the best paths ahead.
Understand and justify
The value-based reimbursement landscape is advancing. Providers that have a strategy in place that effectively defines their cost value proposition are poised for the greatest success. Improving pricing transparency is an important step for organizations as they work to improve the health of populations, enhance the patient experience and reduce the cost of care.
Going forward, the industry’s cost transparency mantra must be: Understand and communicate your price and value.
The views, opinions and positions expressed within these guest posts are those of the author alone and do not represent those of Becker’s Hospital Review/Becker’s Healthcare. The accuracy, completeness and validity of any statements made within this article are not guaranteed. We accept no liability for any errors, omissions or representations. The copyright of this content belongs to the author and any liability with regards to infringement of intellectual property rights remains with them.
