As con­sumers de­mand more price trans­parency, sys­tems need to adapt or face the con­se­quences

Modern Healthcare - - COMMENT - By Joseph Fifer

The bal­ance of power be­tween providers and con­sumers is shift­ing, but many providers are slow to rec­og­nize and act on that shift. They don’t seem to re­al­ize that their long-term sur­vival may de­pend on it.

Sev­eral trends are driv­ing the move to­ward con­sumerism. Con­sumers have more choices about where to get their health­care. Re­tail clin­ics and ur­gent-care cen­ters con­tinue to of­fer in­creas­ingly pop­u­lar and of­ten lower-priced al­ter­na­tives to tra­di­tional care set­tings. Op­tions such as tele­health and vir­tual of­fice vis­its are be­com­ing main­stream.

Con­sumer at­ti­tudes are also shift­ing. The “doctor knows best” mind­set has evolved, with nearly 7 out of 10 peo­ple in their 50s now say­ing they would feel com­fort­able chal­leng­ing a physi­cian’s or­ders, ac­cord­ing to the “Midlife in the United States” study con­ducted by the Univer­sity of Wis­con­sin.

An­other chal­lenge to the sta­tus quo: Tech­nol­ogy is poised to dis­rupt pri­mary care and clin­i­cal lab­o­ra­tory rev­enue streams, with smart­phones now of­fer­ing con­sumers the ca­pa­bil­ity to mon­i­tor their own blood glu­cose, blood pres­sure and other health met­rics.

Be­yond these trends is the un­der­ly­ing re­al­ity that peo­ple are pay­ing more out of their own pock­ets for care. High-de­ductible health plans and other forms of in­creased cost-shar­ing are mo­ti­vat­ing—if not com­pelling—con­sumers to find ways to man­age their out-of-pocket ex­penses. But con­sumers are chal­lenged at ev­ery turn be­cause ac­cu­rate and timely price and qual­ity in­for­ma­tion for health­care ser­vices is still hard to come by.

Re­cent years saw a flurry of ac­tiv­ity in the trans­parency arena. Price trans­parency was the fo­cus of re­search, con­fer­ences and me­dia cov­er­age. But use of price trans­parency tools by con­sumers hasn’t in­creased much. In fact, re­cent news re­ports and stud­ies have shown that uti­liza­tion of trans­parency tools re­mains in the sin­gle dig­its.

There are sev­eral rea­sons why price trans­parency tools have not caught on. For starters, many peo­ple don’t know they ex­ist. Also, the tools fall short on ease of use, com­pared with tools for buy­ing air­line tick­ets, for ex­am­ple. In ad­di­tion, they have lim­i­ta­tions that ne­ces­si­tate mak­ing mul­ti­ple phone calls to get an­swers. In those sit­u­a­tions, the process of get­ting a price es­ti­mate is time-con­sum­ing and com­plex. Real­is­ti­cally, only the most mo­ti­vated and so­phis­ti­cated con­sumers have the abil­ity and the tenac­ity to nav­i­gate their way through this process. We sim­ply do not make it easy for con­sumers.

One ques­tion that is not be­ing asked is why providers aren’t mak­ing a real com­mit­ment to de­liv­er­ing read­ily ac­ces­si­ble price and qual­ity in­for­ma­tion. If health­care lead­ers were hon­est, they would ac­knowl­edge con­cerns about what the pub­lic will see when the veil is pulled back on health­care pric­ing. But many would then turn to de­fend­ing the cost struc­ture that jus­ti­fies their pric­ing rather than mak­ing the pric­ing struc­ture more com­pet­i­tive. It’s un­der­stand­able that lead­ers are re­luc­tant to make tough de­ci­sions be­fore they have to do so. As econ­o­mist John Kenneth Galbraith fa­mously put it, “Faced with the choice be­tween chang­ing one’s mind and prov­ing that there is no need to do so, al­most every­one gets busy with the proof.”

Nev­er­the­less, the re­al­ity is that the mar­ket will de­ter­mine the pric­ing that is ac­cept­able and sus­tain­able, es­pe­cially for com­modi­tized or eas­ily dis­rupt­able ser­vices, such as lab tests, or highly com­pet­i­tive ser­vices such as am­bu­la­tory care. Shield­ing price in­for­ma­tion from con­sumers may de­lay the mar­ket shake­out, but ul­ti­mately it won’t change the out­come.

Health sys­tems can choose trans­parency, ac­cept­ing that they will also need to con­sider ex­pand­ing their price struc­ture to in­clude op­tions such as price bun­dles, flat rates and self-pay rates. Or they can watch as vol­ume mi­grates to com­peti­tors that pro­vide up­front price and qual­ity in­for­ma­tion and de­liver bet­ter value.

With con­sumers in­creas­ingly in charge, the choice for providers is to adapt or ac­cept the con­se­quences of cling­ing to the sta­tus quo.

Joseph Fifer is pres­i­dent and CEO of the Health­care Fi­nan­cial Man­age­ment As­so­ci­a­tion.

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