Price Transparency: A significant force in healthcare

America’s healthcare system is going through transformational changes. Price transparency – providing consumers cost information before services are received – is a significant force in today’s system. 

Transparency’s impact is realized only to the extent that it empowers consumers and influences their behavior. Therefore, we have to consider it against the backdrop of the rise of consumerism in healthcare. The increase in enrollment in high-deductible health plans over the past decade is remarkable:  from 1 million to 17 million, with a steady annual growth rate of approximately 15% since 2011, according to the AHIP Center for Policy and Research.

Health Care Service Corporation (HCSC) research demonstrates the impact of consumer-directed health plans (CDHP) on cost savings. Our CDHP costs are lower across the board: overall spending on medical and pharmacy costs combined decreased nearly 11% over three years, inpatient costs decreased by 23.5%, and professional services decreased by 14%.

Increasing enrollment in these plans – and the resulting increase in consumers’ out-of-pocket share of health care spending – creates powerful incentives to develop more price transparency tools and engage consumers with tools they need to make educated decisions about medical care. At HCSC, we offer a market-leading set of online transparency tools that have saved members on average $900 per procedure. Known as the Provider Finder, this health care solution enables members to more easily research and select physicians and hospitals, as well as estimate out-of-pocket heath care costs.

As important as price transparency is to the future of our health care system, price is only one of the tools that consumers need to assess the value of the services they receive. Consumers also need to have information on care outcomes and quality relative to cost. They also need information on patient satisfaction and other key indictors of value, in order to make informed health care decisions. As Warren Buffet put it, “price is what you pay, value is what you get.” We all know healthcare is not a commodity.  Quality matters. Giving consumers the full picture – meaningful quality information in addition to cost estimates – enables us to provide “value transparency.” HCSC is committed to providing our members with robust value transparency, as an important part of further transforming and improving our health care system.

Now that we know what value transparency is, how do we work together to achieve it?  What are the core components towards success? Here are keys:

• “We have a responsibility to engage and empower our members." The goal of consumer transparency should be to help consumers make informed and educated decisions on medical care. As out-of-pocket costs rise, we need to empower consumers with industry-leading tools to shop for value in their health care decisions with customized calculations of out-of-pocket costs that show both employer and employee portions.

• "Collaboration because it will yield the best results." Price transparency can be a loaded term, interpreted differently depending on the audience: hospitals, physicians, consumers, employers, researchers, the media, and policymakers. In order to see better results, the healthcare industry must work collaboratively to turn data into information to empower decisions that drive changes to continue to bend the cost curve. This is true for both cost and quality measurement. 

• Exercising the three “Rs” of quality – Reduce, Refine, and make Relevant.  We need to reduce the variability between the measures of quality reported and to retain only those that are the most meaningful measurements. The measures we keep should be refined to make them easier to obtain from existing data sources. Lastly, they should be relevant to the clinical outcomes consumers need and should be presented in a way that is relevant and usable by consumers.

The truth is that when it comes to healthcare options and costs, we all have a vested interest. As price data becomes more available and our analytic power continues to increase, consumers will come to expect more (and rightfully so). As an industry, we must rise to the occasion. We have a moral obligation and business responsibility to ensure that consumers have information, resources, and transparency solutions to make informed decisions about their healthcare options, and not only in terms of price.    The future of healthcare depends on it, as does our legacy.