With savvier healthcare consumers beginning to shop around for the best deal, many hospitals and health systems are devising pricing and billing strategies that mimic those of the retail industry. And according to new analysis from the Health Research Institute, that's exactly what they should be doing.
The shift is happening as patients are increasingly on the hunt for cheaper services and more transparent pricing, often opting for standalone operations such as retail clinics for their care. Numbers suggest this trend is accelerating. An HRI survey in 2014 found that 26 percent of American adults said they had contacted different doctors and health systems about prices. By 2015 the number had climbed to 30 percent, and almost 40 percent said they had asked ahead of time for the price of a prescription or procedure.
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More than one-third of consumers said they would be willing to go to a retail clinic for services such as an imaging procedure, according to HRI, likely because they charge less than hospitals. So healthcare executives have been taking action.
Most of those interviewed by HRI said they had adopted strategies common to the retail industry -- strategies such as price quotes, simplified billing, consumer outreach and money-back guarantees. So far these approaches seem to be helping larger systems gain and maintain volume.
Sometimes that comes at a price. Adventist Health System, for example, recently conducted a market analysis on pricing, comparing its prices to others in the community, and with that benchmark it examined its chargemaster to see which services drove revenue and which prices could be cut.
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The numbers were surprising: Reducing key components of its chargemaster between 30 to 40 percent would result in reduced annual revenues between $50 and $75 million. But Adventist is staying with the approach and plans to spread those losses out over several years to absorb them incrementally.
Then there's the Oklahoma-based INTEGRIS health system. About a decade ago the system started work on what would become its Priceline tool, which provides about 240,000 price estimates for outpatient procedures each year. Not only are the price quotes accurate -- they generally come within 3 to 5 percent of the actual charge -- but it's helped the system steer patients to lower-cost clinicians that are still within the INTEGRIS network. As a result, INTEGRIS went from $1 million in point-of-service collections in 2008 to $18 million in 2015.
Money-back offerings also seem to be helping with volume retention. Pennsylvania-based Geisinger Health System has discovered this firsthand. The system offers price quotes, a one-stop web portal for patient information, and a simplified bill, in addition to guaranteeing some money back if a patient is unhappy with his or her services. Since October 2015, the system has given back about $120,000 in patient balances.
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Developing an "all-inclusive" bundled service offering for a hospital's core service is one way for a health system to build volume because it's more representative of the tradition retail experience, said HRI. Price transparency is also paramount, because it's what consumers have come to want and expect.
These strategies are necessary, said HRI, because price-shopping consumers are discovering that prices can vary significantly from medical center to medical center. In Concord, New Hampshire, for instance, one hospital charges $1,600 for an MRI while a standalone imaging center in nearby Derry charges $1,200. In Maine, a wrist X-ray costs about $255 at one hospital, but only $52 at an imaging center.
Twitter: @JELagasse