The basic lack of transparency around the cost of health care has long contributed to wasteful expenses and ineffective care. Widespread price fluctuations in medical services – without logical or true value measure – are often the status quo in US health care. This makes the pricing of healthcare opaque and inhibits consumers and buyers from the choice of quality or value care.
In no other industry would consumers work so blind before making a purchase. For example, a diagnostic sample collected in one facility can cost significantly more in another environment in the same complex of the city. Similarly, consumers generally do not have information about the cost of drugs before reaching the pharmacy counter – let alone the tools needed to go to effective alternatives that may be less expensive than the doctor has prescribed. Efforts such as the recent executive order by President Trump demanding hospitals and insurers to provide clear, accurate pricing information, instead of estimates, will help address the problem, but we need a more focused effort throughout the ecosystem of health care.
Public programs, such as Medicare and Medicaid, the prices of payments set by the Regulation. This brings a measure of predictability to their percentages. However, the insurance sector funded by the employer, which covers half of the US population, lacks this structure. In addition, employers do not have the leverage and scale to lead the refund changes or scale quality measures in the same way that public programs can.
For employers, health benefits management is an already complex project, demanding significant time and resources to provide a high value experience for their employees. If employers had price visibility, they could plan their benefit to lead the use of more affordable options. Without it, employers cannot guide their employees to higher quality, more affordable care.
Transparency efforts aimed at making healthcare more “buyers” have the opportunity to create significant savings, estimated at billions of dollars. In the context of the health care funded by the employer, there are many benefits:
- First, transparency can affect market dynamics by encouraging competition between insurers and providers. This supports lower negotiating prices, especially in purchases with one or two dominant players.
- Secondly, transparency can encourage providers to offer competitive prices and higher quality services to attract patients. This is the key to helping patients remain committed with their care
- Finally, transparency has the ability to enable consumers to make more efficient and well -informed care choices. But we need a stronger, more interoperable data infrastructure-with a consumer-friendly interface to provide information on patients directly.
While sectors such as financial services and utilities have evolved quickly to offer prices comparisons that help consumers make documented decisions, minimal progress in healthcare has been made. Transparency efforts to date have been largely focused on hospital prices, which is undoubtedly the care that is less discreet for US consumers.
Fortunately, the federal government has begun to recognize the extent of this issue and there is bilateral support to ensure that the prices of health and health therapies are easier and consistent. It is noted that transparency is a focus on Trump’s administration and legislators have marked a renewed commitment to it.
Legislatively, recent efforts have focused on building the transparency of the coverage rule to expand the requirements of prices beyond hospitals to include diagnostic laboratories, imaging centers and walking surgical centers. Other efforts will equip employers with drug prices and require Medicare Advantage organizations to report benefits.
Neutral payments, which ensure that the costs are the same for the same service, regardless of the location, has gathered strong support for all political parties.
The private sector also has a role to play. We need a more targeted attempt to escalate solutions that prioritize more efficient utilization of healthcare, which is the key to driving better results and maintaining patients from expensive care arrangements such as hospital. This was fundamental to several Morgan Health investments, including EMBOLD (Analytics Quality Analytics), Apree (Advanced Primary Care) and Cotitivo (alternative, led by insurance planning).
Transparency in healthcare pricing and agreement on what is not just an urgent policy – is a business. By supporting these changes, we can create a more effective health care and higher quality system that keeps Americans healthier.
