Price transparency is a touchy subject in healthcare. It's one of the last market strongholds desperately clutching to its principles of price secrecy, and it won't go down without a fight.
A provider generally functions as a profit-driven business, and if the consumer remains unable to compare hospital prices and outcomes, the chances of crafting effective incentives to improve quality and reduce costs are effectively nearing zilch.
[See also: CMS publishes hospital price data]
Nationwide, providers are struggling financially due to low Medicare and Medicaid reimbursements, declines in patient volumes, upticks in charity cases and bad debt cases. If patients are incentivized to shop around for prices, that may represent enormous implications for a hospital's bottom line.
Are hospitals with the most prestigious reputation necessarily producing the best outcomes? Or can a patient go to another, less prestigious hospital and have a medical procedure done getting the same quality but for a fraction of the cost? Many emphatically nod their heads yes. But have fun prying the data out of industry's clenched fists.
"Some of the biggest names in healthcare may or may not have the best care," said Michael L. Millenson, president of Health Quality Advisors, and champion of a value-based healthcare system, in an August interview with Healthcare Finance News' sister publication, Healthcare IT News. And both patients and providers should have access to that information.
Millenson cited Cadillac as a comparative example. Upon its inception, the car marque essentially enjoyed a monopoly in the luxury car market, establishing a big name. However, when competitors emerged and more quality products became available for lower prices, customers soon realized the brand name wasn't always indicative of the best product; thus fewer people were purchasing the cars.
[See also: Study shows price transparency an issue for hospitals]
Others, however, say one can't take what's happening in other markets and flawlessly apply it to healthcare.
Peter Ubel, MD, behavioral scientist at Duke University, argued in an article he wrote for The Atlantic in April that it's just not that simple. "For starters, most patients have little inclination, or motivation, to shop for health-care bargains, (as) insurance companies pick up most of the tab for patients' health-care," he wrote. "A patient who pays a $150 co-pay for an MRI (like I do with my insurance) won't care whether the clinic she goes to charges the insurance company $400 or $800 for that MRI."
Paul Ginsburg, healthcare economist at the Center for Studying Health System Change, agrees that price transparency is not necessarily the magic answer. However, he maintains that quality transparency does pack a powerful punch. "The more aware consumers are of the ill effects of poor-quality care, the stronger the movement to build transparency initiatives that help patients choose providers wisely and inspire physicians, hospitals, and other providers to improve their performances," Ginsburg said in a 2010 healthcare workshop series summary.
He argued, however, that the notion of transparency is far from one-dimensional and extends far beyond access to quality metrics data. The data needs to be presented in a variety of ways for a variety of consumers. "Sophisticated consumers may seek and understand more detailed and complex data, while others might be satisfied with less-detailed descriptions of provider quality."
The provider, patient, intermediaries and the government alike all have roles to play in the transparency department, according to Ginsburg, but until they begin playing these roles aggressively, real change isn't going to materialize any time soon.
Nevertheless, in the wake of more states signing legislation requiring increased healthcare price transparency for the consumer and the recent hospital-pricing database released by HHS, the industry appears to be fighting a losing battle -- however sluggish the pace.
[See also: 29 states get failing grade for price transparency laws]