5 Reasons Why We Should Demand Price Transparency In Healthcare

By Tom Schramski, PhD, CMAA

Volume 4 Issue 18, August 29, 2017 

Window cleaner using a squeegee to wash a window

In 2016, Ohio passed the Healthcare Price Transparency Law, which would force healthcare providers to give patients a “good faith” estimate for non-emergency service expenses after considering insurance reimbursement. The Ohio Hospital Association, among others, has successfully fought implementation to date with claims that the expense of healthcare is too complex for such an attempt to be consumer-friendly.

On the other hand, Massachusetts’ patients can request an estimate post-admission if they request it, Nebraska requires hospital clinics to post the average charge for their services, and New Hampshire has a website where anyone can compare various healthcare costs.

The reasons for the resistance in Ohio and elsewhere are multiple and they point to a central problem – the industry of healthcare is fighting innovation, threatened by the same transparency that we expect from our local mechanic, a national grocery store, or an online travel service.

Despite the challenges, there are several good reasons why price transparency could fuel much needed healthcare consumerism:

  • Transparency fuels competition – Competition is at the core of our free market system and has driven product and service improvement in our economy forever. When a new outpatient clinic management knows the price for a similar service at a rival clinic, might they not reduce some prices as a way to increase their competitiveness?
  • Transparency opens the door for accelerated innovation – Price transparency typically encourages companies to innovate with the hope of enhancing a service, improving margins, and attaining desired market share. What would happen if the middle manager in a home health agency proposed a software tweak that increased the speed of payment and improved cash flow at no additional expense?
  • Transparency improves performance – The recent history of American business shows that transparency in various forms, including open book management, mobilizes everyone in the organization to examine their individual contribution to its economic success. Can you imagine the receptionist at an ambulatory surgery center proposing a new admission process that reduces expense while adding value for the patient?
  • Transparency makes healthcare more patient-centered – When consumers know the price, they also look to value as a differentiator when making a choice of service or product. Does it make a difference to a consumer or referral source that an outpatient endoscopy clinic can provide the same or greater value/price as a hospital in half the time?
  • Transparency increases the emphasis on health – Today, healthcare reimbursement is focused on healthcare interventions (e.g. doctor office visits) compared to outcomes and overall health status. What if the reimbursement is at least partially tied to a reduced PSA score for selected male patients?

Rebels like those that led the Ohio transparency effort will continue to face enormous odds because of the symbiotic nature of the American healthcare system, especially the unholy alliance among hospitals, physicians, and insurance companies. Price transparency is becoming an expectation for all of us and it is one way to keep the focus to better healthcare accountability for everyone.

Think about it the next time you go shopping while trying to manage within your family budget.

If you would like to personally discuss this article, the value of your company, or how to get the best price when you sell it, you can reach Tom directly at tschramski@vertess.com or520.975.5347