Pricing Transparency? First, Pricing Consistency

Healthcare leaders across the country aren't oblivious to calls for pricing transparency. From last year's "Bitter Pill," to the New York Times' investigation of widely variable pricing in labor and maternity care, to absurd consumer accounts of attempts to get pricing information, public support for greater transparency around healthcare pricing has reached a near tipping-point.

After all, in no other industry do consumers have so little information on prices. Comparison shopping is extremely difficult, if not impossible.

However, making pricing information more transparent is easier said than done. Any hospital or practice administrator knows why this is so — charges (that is, chargemaster rates) rarely reflect what patients and their insurers actually pay. Instead, the charges are the result of complicated calculations that must take into account eventual insurer and other discounts.

Because of this (and a host of other reasons), chargemaster rates vary widely from one facility to another. For example, a vaginal delivery at Phoenix's Maricopa Medical Center runs $3,850. In New York City, expectant mothers can expect to be charged well over $10,000 for the same services, according to the NYT report.

Prices can vary almost as drastically even for facilities in the same city. Even more interesting, hospitals within the same parent system may have significantly different chargemaster rates for the same service.

Daniel Young, director of revenue integrity for 15-hospital, Englewood, Colo.-based Centura Health, recognizes that pricing variability among its facilities can be confusing to consumers, and says the health system is currently exploring how to improve consistency in pricing.

I spoke to Mr. Young at the Healthcare Financial Management Institute's Annual National Institute last week in Las Vegas. At the conference, Mr. Young and Craneware's Vice President of Professional Services Michael Najera, presented key learnings from Centura's experience working to standardize charging across diverse facilities and create a sustainable charge capture workflow.

Several years ago, Centura began its journey to standardize it chargemaster, with hopes to move from, at the time, 11 individual chargemasters, to a single corporate chargemaster. With more than 126,000 line items, the system "began the process to gain some efficiencies across the system," said Mr. Young. Today, the system has reduced its line items to around 40,000 — which has greatly improved efficiency and consistency around charges.

While the chargemaster is now fairly consistent across all facilities, the system hasn't yet implemented consistent pricing across all facilities. However, Mr. Young says more consistent pricing across the system is planned for the future; Centura has developed an active task force dedicated to researching and implementing pricing standardization and transparency initiatives. "We are moving more toward consistency and transparency in our pricing," he explained, adding that such a move would help provide patients with a more consistent experience across the system — and a more consistent overall brand.

As health systems consolidate, consistency in charges and pricing will continue to be a challenge. But, it seems the most sophisticated systems realize that working toward consistency will be key, especially as health services purchasing becomes more consumer-driven.

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