Price Trans­parency: Where to Start

AS THE HEALTH­CARE IN­DUS­TRY CHANGES ITS RE­LA­TION­SHIP WITH THE CON­SUMER, THE CON­SUMER WILL DE­MAND MORE IN­FOR­MA­TION. START­ING WITH, “HOW MUCH IS THIS GO­ING TO COST?”

Modern Healthcare - - REFORM UPDATE - BY CHRISTINA GALOOZIS | Mod­ern Health­care Cus­tom Me­dia To dis­cuss your or­ga­ni­za­tion’s strate­gic chal­lenges, con­tact Jeff at jd­jones@huron­con­sult­ing­group.com or 503.347.0554.

CG: What is the first step for providers that would like to be more trans­par­ent with their prices?

Jeff Jones: Clearly de­fine the ob­jec­tives for pro­vid­ing that trans­parency. In some cases, it may be strate­gic to en­gage con­sumers. Or it may be in re­sponse to mar­ket pres­sures from com­peti­tors, the me­dia or govern­ment. But un­der­stand first why you are do­ing it and who will be uti­liz­ing the in­for­ma­tion. Providers don’t need to be in a rush to pro­vide com­plete pric­ing for ev­ery­thing they of­fer. Un­der­stand what por­tion of your ser­vices are highly uti­lized, and of those ser­vices, de­ter­mine which are go­ing to be some of the most straight­for­ward to pub­lish. Fo­cus on the 15 to 20 per­cent of your ser­vice types that ac­count for 60 to 70 per­cent of your vol­ume.

Jeff Jones has more than 26 years of health­care con­sult­ing ex­pe­ri­ence in strat­egy, op­er­a­tions im­prove­ment and in­for­ma­tion tech­nol­ogy im­ple­men­ta­tion. Jeff leads strate­gic plan­ning and strate­gic re­la­tion­ships for Huron Health­care.

CG: What can the health­care in­dus­try learn from oth­ers re­gard­ing price trans­parency?

JJ: Think about the air­lines, au­to­mo­bile man­u­fac­tur­ers, wire­less com­pa­nies, and fine dining restau­rants. All of those en­ti­ties have mul­ti­ple el­e­ments that go into a fi­nal price. They have dif­fer­ent method­olo­gies, but in many cases, there’s a base price and add-ons. I think that is true in health­care as well. In some cases, there will be vari­abil­ity. Flight prices, for ex­am­ple, de­pend on how far you’re go­ing and where you want to go — even where you want to sit in the cabin.

It would be worth do­ing at least some ba­sic con­sumer re­search, like we do in most other in­dus­tries, to un­der­stand what con­sumers’ ex­pec­ta­tions are and their cur­rent knowl­edge level, so that as you’re putting your pric­ing to­gether, you’re do­ing it in a way that has the right level of in­for­ma­tion but also the right level of ed­u­ca­tion.

CG: What is the big­gest ob­sta­cle to achiev­ing price trans­parency in health­care?

JJ: Find­ing a way to make the in­for­ma­tion eas­ily di­gestible for the health con­sumer, while also as­so­ci­at­ing the value of the ser­vice pro­vided. Be­cause if you fo­cus so much on just cre­at­ing price trans­parency, but you haven’t done enough to es­tab­lish the value, it be­comes a pure cost play. There is also a ques­tion of choos­ing be­tween com­pre­hen­sive pric­ing or mak­ing the in­for­ma­tion easy and sim­ple. In the near term,

I would choose to make this in­for­ma­tion sim­ple.

CG: How does the tim­ing of the tran­si­tion to­ward ac­count­able care af­fect price dis­clo­sure?

JJ: In the near term, the ef­fect is that in­creased cov­er­age through

ac­count­able care is com­ing with higher de­ductibles. We are go­ing to see con­sumers more in­ter­ested in the pric­ing struc­tures be­cause they are fi­nan­cially re­spon­si­ble for a much greater por­tion of their care.

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