A Welcome Trend in American Healthcare: Pricing Transparency

By PokitDok Team,

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Price transparency is a bedrock principle of consumer-driven healthcare. This means that patients should be able to know how much a visit, drug or procedure will cost on the front end of a transaction in order to make an informed decision. Unfortunately, regulations and perverse incentives often prevent the ability to access this data — thereby offering an explanation as to why health related expenses are the No. 1 reason for bankruptcy in the US. Technology, intrepid reporting and local laws are all helping bring price transparency to healthcare — and we couldn't be more excited. Before the possibilities to come with consumer driven healthcare, a lot of patient education needs to be done to make this positive patient experience possible.

Here, for your entertainment and education, is a snapshot of where we stand today, and where we're headed this year:

The Legacy of Price Opacity

Just as Rome was not built in a day, overhauling the American healthcare system can't be done overnight. It is frustrating right now though, for anyone paying monthly for an insurance plan with a high deductible or a high out-of-pocket-costs threshold. "In an era where many of us have to shell out thousands of dollars before insurance kicks, there's nothing kind about concealing prices," Marketplace's Dan Gorenstein writes.

Price transparency is still a fairly new idea to many healthcare businesses — and, perhaps surprisingly, to patients. According to research from PricewaterhouseCoopers and from experience from our own team early in PokitDok history:

  • 66% of consumers report never having spoken with a doctor about the price of a visit.
  • 57% of consumers have never spoken with a doctor about the price of a prescription.
  • 60% of consumers report never having spoken with a doctor about the price of a procedure.

This means - shockingly - that nearly 2/3 of the American public doesn't know the cost of a given procedure or drug...until they receive the bill X number of days or months later. "Today's healthcare pricing is totally screwed up, with almost no transparency," writes management consultant Don Peppers. "Next time you or someone close to you has a stay in the hospital, for instance, just try to piece together what it actually costs, and what particular costs were attributable to which particular elements of care."

Almost no one would walk into a restaurant and order off the menu without at least having some idea of what the price is and certainly, few walk into high-end clothing stores or go on trips without planning for those pending expenses. Soon, this seemingly basic luxury will be true for healthcare too - and that day can't come soon enough.



Potential Difficulties Price Transparency Could Create

Don Peppers suggests that price transparency in healthcare, while imperative to the future of the system, could create a few adverse, mid-transition, conditions that are indeed important to note:

  • Transparency could send false signals about the quality of a given service or procedure. "If price transparency allows a consumer to discover that one provider charges $10,000 while another charges just $2,000 for the same procedure, which one would the consumer judge to be of higher quality?"

While this is indeed a possibility, it is an absolutely natural evolution that comes with data availability and analysis. Further, since so many other industries have already been through this transition (think Yelp, Tripadvisor, etc.), healthcare will be able to apply, integrate and test these learned principles hopefully more nimbly, despite the innate difficulties that come with the nature of the business.

  • It would compel providers to raise their prices to match the competition, not vice versa.

If healthcare gets to the point that this is a problem, this issue can be solved, as other industries have before it, with software and user experience adjustments to ensure the accurate application of quality pricing and review data.

Peppers also notes that the network of contractual relationships that bind payers, providers, clearinghouses and all other business — the Gordian knot, if you will — would be disrupted, and that fallout would affect payers, providers and patients.

Jeanne Pinder, a reporter focusing on healthcare costs, points out that many care providers who accept Medicare and Medicaid say they're contractually forbidden to list their prices. "We know that providers are often not free to publicize their negotiated rates via insurance companies, because of nondisclosure agreements, but cash prices seem to us to be different," Pinder writes. So, even for patients who want to settle a bill for healthcare provision in cash, the network of agreements and payer relationships continues to obscure pricing signals. Maybe that network needs a little disruption.

David Brooks, CEO of virtual health insurance platform Medlio, authored a piece on HIT Consultant on why transparent pricing requires a layer of context that might not yet be available to consumers. Upfront pricing, he writes, includes:

  • Specific health benefits of a procedure or service for each patient
  • The contracted rates between the payer and the provider
  • A precise list of any and all services to be rendered

That means, for example, follow-up tests couldn't be factored into the price of an exam because your doctor doesn't yet know what follow-up tests to recommend. Brooks argues that any listed price void of that context would be irresponsible and "borderline unethical."


The flipside of that argument? A lack of any upfront pricing dissuades patients from seeking treatment in the first place. Health IT Outcomes former Editor in Chief Ken Congdon cites a Harris Poll survey, that found 1 in 5 American adults avoid going to the doctor simply because they don't know what the trip will cost them. This truth fosters a culture against preventative health, which only costs more- for everyone -in the end.

"For most, medical expenses are still an unknown until an invoice or EOB shows up in our mailbox weeks later," Congdon says. "This (combined with confusion surrounding coverage and patient responsibility) is why insured patients continue to avoid the doctor. This needs to change, and it needs to change soon."

Stay tuned for more on price transparency and what we're doing to make it a reality. More questions about our Private Label Marketplace, where our customers can allow their patients to shop for providers, check their insurance eligibility, schedule appointments and pay and services online? Contact us for a demo or for more information.

images by:
Dishan Lathiya, Public Domain Pictures, tookapic

The opinions expressed in this blog are of the authors and not of PokitDok's. The posts on this blog are for information only, and are not intended to substitute for a doctor-patient or other healthcare professional-patient relationship nor do they constitute medical or healthcare advice.

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