Sensitivity About Provider Price Information

What one hospital charges for a particular procedure varies widely based on a host of factors. Understandably, many providers who are otherwise all for transparency when it comes to patient outcomes are reticent to disclose cost data. There are real reasons for concerns on the globalization of medicine. However, health care is largely a local phenomenon.

What are the compelling reasons for being as transparent with prices as with anything else? For one, increasingly, consumers are armed with price information today that exceeds anything they could have assembled even just a few years back. Also, in the mind of many consumers, price equals quality. Logical or not, this notion has become ingrained as a result of their consumer experience in other industries.

Wine under one label is deemed more expensive than wine under another label, even in the case where the wine has proved to be exactly the same, from the same source, processed and delivered in exactly the same manner.

Reputation Enhances Price – At the supermarket, branded merchandise still sells at a premium compared to store or generic brands that offer the same ingredients, molecule by molecule. Your hospital’s reputation could prove to be the deciding factor in whether or not a patient will plunk down more money to be treated by you over others who, based on all comparison measures, offer exactly the same care and service.

Suppose a consumer does his homework and finds that you and a competitor have entirely equal success rates for particular procedure, and you charge 15% more. Is this a reason to fear price transparency? No, because with all the data available for a consumer to peruse to his heart’s content, the decision to choose one provider over another is multifaceted. Price is one factor, albeit an important one, among several.

Many consumers will go with the lowest price. Many will choose the best value – a blend of price and quality. Short term, there is not much you can do about the prices for some of the procedures you charge. In the long run, everything is up for grabs.

More Business, Lower Prices – The more often a hospital performs a particular procedure, and the more experience its doctors accrue, the better it is able to offer that procedure at a lower price. Even in health care, greater business volumes contribute to economies of scale. In the short run, you can’t do that much about the volume you handle for any particular procedure. In the long run, you could seek dominance in your local or regional area by publicizing your experience in a given procedure. Thus economies of scale could result and price transparency would work to your favor.

At Alegent Health, based in Omaha NE, the prevailing attitude is that consumers have a right and ought to be able to easily know how much a provider charges. Three years ago, Alegent launched My Cost, found at, an consumer-friendly feature that offers cost estimates for a variety of tests, procedures, appointments, and services.

So, You Want Cost Data – Visitors can simply enter the name of their insurance providers and any co-payment or deductible information. The system then presents a cost estimate that is useful in personal health care decisions., The visitor is also treated to financial assistance information via links provided, and a phone number in case their anticipated procedure is not listed on the site. Now up and running for nearly three years, more than 50,000 cost estimates have been generated at My Cost.

Alegent’s experience in promoting price transparency has been that consumers appreciate the honesty and openness of the organization. Instead of price transparency scaring away potential business, in this case it has led to stronger provider-patient relationships. Alegent’s CEO says transparency “isn’t necessarily easy, and it does take courage, but in the end it is the right thing to do for consumers and the community.”

Make the Commitment – Commitment to transparency takes guts. Yet, what other choice is there? Fortunately, as we’ll see, there is room for creativity and initiative.

Providing information on the results that your hospital achieves for patients, at the medical condition level, is vital. Your data needs to include patient outcomes with an adjustment for risk based on prior conditions, the overall cost of care, and measurements for both extending through the care cycle.

Transparency also encompasses offering the experience your hospital has in treating specific medical conditions, by volume of patients, coupled with delineation of such treatments based on methods of care offered. Your processes, in the long run, can be improved only by understanding how results are achieved, which methods are most effective, how they might be refined to make critical differences, and what the actual outcome of such refinements have been.

Details Count – Outcomes for a specific medical condition can and should be expressed many ways. For, say, shoulder surgery several validated measures exist such as range of movement, reduction of pain, and ability to function. Still other outcome measures for shoulder surgery include the interval between the initiation of care and return to normal activity such returning to work or playing tennis again.

Data related to the particulars of patients, known as patient attributes, such as gender, age, genetic factors, and prevailing conditions, are vital elements of transparency and are essential for assessing risk. Accurate diagnoses is vital for both the patient and the provider. A transparent provider will publish measures of diagnostic accuracy including cost, timeliness, and completeness.

Outcome measures that only address episodic interventions fall short because they fail to yield results meaningful to the patient. Such short-sited reporting and consequence scoring can be counterproductive and lead to the publication of misleading data.

Failure is not pretty and human beings instinctively want to avoid reporting their own shortcomings, much like organizations. Still, ineffective treatments – errors in procedure, medication, or treatment – and complications following a procedure need to be identified and scored. As unpleasant as this task may be, it is a step on the path to improved levels of treatment and overall service. You cannot fix a problem that you refuse to acknowledge.

Expand Your Measures – A traditional core measure, “the 30-day readmission rate,” tracked by the government, is of course a potential indicator of poor quality. Who wants too many patients are readmitted within 30 days for the same problem.

You may be able to devise your own kind of data measures by tinkering with traditional data measures. For example, you could align your total quality management efforts, such as your Six Sigma Performance Improvement initiatives, around improving the 30-day readmission rate and devote resources to that. In turn, for each of the core measures which need to be fully transparent, you may wish to devise two, three, four or more strategies to ensure that your scores improve over time. Rest assured, other providers will be doing the same.

Costs Mysteries No More – Unlike most businesses, many hospitals, to this day, don’t know what their actual charges ought to be. They charge for this procedure or that based on tradition, competition, payer contracts, or whatever cost data they can scrape together. A comprehensive understanding of true cost is often lacking. If and when the government mandates that hospitals publish price and quality information, they will need the technical ability to do so.

In almost all cases, some web restructuring proves to be vital. There needs to be a huge consumer section that is highly inviting. Take the bull by the horns and invite the consumer to go patrolling through your data. Just as industrial companies publish annual reports with a profit and loss statement, balance sheet, and cash flow analyses, you might choose to offer a five-year projection as to the life cycle cost of a procedure and its follow up.

Implications for Your Hospital – Is transparency part of your agenda for your weekly and monthly meetings?

  • Has your hospital developed policies and procedures in relation to transparency?
  • Within your own office or division, are top officers involved in the transparency discussion?
  • Have you attended any conferences and symposiums on transparency?
  • Are you monitoring other providers who have already made the conversion to transparency?
  • Are you devising plans to capitalize on the inherent opportunities in offering transparent data?

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