Consumer response to the accessibility of pricing and investment information will help determine the effect of increased financial transparency on providers.
President George Bush issued an executive order in August for federal healthcare organizations and their contractors who administer or sponsor healthcare to meet transparency and quality standards. Supporters believe this will increase competition and empower the consumer.
But whether increased financial transparency will greatly affect consumers’ decisions when choosing care providers remains to be seen.
As the only rate-regulated state, Maryland has had price transparency as part of its healthcare model for nearly 30 years, said Richard Grossi, chief financial officer of Johns Hopkins Medical Group.
“It is not clear that access to this information affects decisions about care on the part of the patients who still seek out qualified physicians and get their care in the most convenient location rather than the cheapest,” he said.
Price transparency could be even less of an issue for patients selecting a specialist rather than a primary care physician. “If [patients] require highly specialized care, neither location nor price seem to be a barrier,” Grossi said.
For hospitals, increased transparency might affect how much impact consumers have on investments.
Healthcare Financial Management Association President Richard Clarke said certain hospital investments happen without question because they enhance the experience for the consumer. These include improvements in areas such as facilities navigation, ambiance and private rooms.
Other spending is done in areas that promote the hospital’s image as a quality facility. “Investment in IT, registration systems, billing systems, training for staff, increasing staff - all of those investments are a result of the belief that consumers will make reputation decisions if not economic decisions,” said Clarke.
Frank Kittredge, senior principal of Mitretek Healthcare, said physicians don’t seem too concerned about how transparency requirements will affect investments. “I think [physicians] think that if they invest in something, that could be found out,” he said. “It’s a good rule, because it’s part of the checks and balances of the system.”
Providers affected by Bush’s executive order will have to answer a large volume of patients’ questions regarding pricing and payments, particularly in the area of Medicare, said Clarke.
“That claims data was not necessarily designed to make sense for the consumer environment,” he said. “If you look at what is billed to Medicare, and what Medicare is paying, often there’s a big difference. Those things cause the patient to say, ‘This doesn’t make sense.’ That’s a fundamental problem we have to work on.”