Price Transparency: The Devil is in the Detail for Hospitals

By Stewart Gandolf
Chief Executive Officer

Male doctor holding up a calculatorLet’s say an informed patient determined that the cost for “arteriography and angiocardiography using contrast material” was half as expensive at “Hospital A” as compared to “Hospital B.” At half price, would they want to buy two procedures? On the other hand, does the consumer trust that “cheapest available” is the ideal purchase decision in health care?

More realistically, would a prospective patient understand and use the correct terminology? Would they recognize what additional hospital costs are typically associated with the price of the procedure?

Hospitals, physicians and healthcare communicators are grappling with the devilish details of healthcare price transparency. With healthcare transition propelling change, the overarching goals and objectives are praiseworthy. But the high road to meaningful implementation is bumpy at best.

For marketing professionals, additional challenges are in how to inform “payers and patients who want to know up front what they have to pay for care. It’s not an easy question.

Some hospitals are making it happen,” according to Hospitals & Health Networks, the flagship publication of the American Hospital Association. Here’s how they framed the issue for an in-depth article recently:

  • Hospitals must become more transparent about the cost of care they provide.
  • Payers and employers want to know costs up front and to compare hospitals for value.
  • Patients want to know up front what their out-of-pocket expenses will be.
  • Some hospitals have set up consumer pricing hotlines and online cost-estimator tools.
  • Some hospitals offer all-inclusive packaged prices for certain services and procedures.
  • Employers will pay travel expenses to patients who go to one of their designated hospitals, even if it’s far from their home base, if they feel they cannot get the same value locally.

Massachusetts Requires Price Tags For Health Care

As of this month, “Massachusetts is the first state to require that insurers offer real-time prices,” according to WBUR’s CommonHealth article. But opening this information channel unleashes caveats and consumer confusion. In the new Massachusetts system, the author found:

  • Prices are not standard; they vary from one insurer to the next.
  • Posted prices may or may not include all charges.
  • Prices seem to change frequently.
  • There is no standard list of priced tests and procedures.
  • The quality information is weak.
  • There are very few prices for inpatient care.

“Price transparency stinks in health care.”

The attention-getting Washington Post headline introduced another article about how the healthcare industry wants to improve Price Transparency in Health Care and an informative report from the Healthcare Financial Management Association (HFMA) Price Transparency Task Force.

In part, the Guiding Principles and Policy Considerations from the HFMA Task Force direct, “To be effective, price transparency must offer clear information that is readily accessible to patients and enables them to make meaningful comparisons among providers.

  • Price transparency should empower patients and other care purchasers to make meaningful price comparisons prior to receiving care.
  • Any form of price transparency should be easy to use and easy to communicate to stakeholders.
  • Price transparency information should be paired with other information that defines the value of services for the care purchaser.
  • Price transparency should ultimately provide patients with the information they need to understand the total price of their care and what is included in that price.
  • Price transparency will require the commitment and active participation of all stakeholders.

Communications, marketing and advertising challenges…

In a retail environment—when there’s an apples-to-apples comparison—competitive pricing is easier for the consumer to understand and use as a purchase decision guidepost. Similarly, price comparisons may be helpful when the health care service or product is elective care (and often a purely cash purchase).

But meaningful price transparency for hospitals and inpatient medical procedures and services can be confounded by “too much information.” Often, the consumer has no reasonable way to compare data points. And, to further compound the problem, the individual nature of healthcare usually means that the final cost will vary from person to person according to their medical needs.

A communications downside is that the end-user/patient is more confused that ever by the transparency, including several databases, by unfamiliar clinical terms, and by a lack of uniformity for comparisons. And when people are confused, they don’t act.

A Toolkit for Hospitals…

“[The] consumer demand for meaningful and transparent price information will only continue to grow,” in the view of the American Hospital Association. “To meet this demand, hospitals and health systems must take a critical look at where they currently fall on the price transparency spectrum and take steps to improve how they communicate pricing information with patients and their community.

“The American Hospital Association has developed Achieving Price Transparency for Consumers: A Toolkit for Hospitals. [Available online here.] This resource includes a self-assessment checklist, case examples from hospitals around the nation, sample web-based tools, and other resources.

We welcome your thoughts on the challenges of price transparency.

Author: Lonnie Hirsch

Stewart Gandolf
Chief Executive Officer at Healthcare Success
Stewart Gandolf, MBA, is Chief Executive Officer of Healthcare Success, one of the nation's leading healthcare and digital marketing agencies. Over the past 20 years, Stewart has marketed and consulted for over 1,000 healthcare clients, ranging from practices and hospitals to multi-billion dollar corporations. A frequent speaker, Stewart has shared his expertise at over 200 venues nationwide. As an author and expert resource, Stewart has also written for many leading industry publications, including the 21,000 subscriber Healthcare Success Insight blog. Stewart also co-authored, "Cash-Pay Healthcare: Start, Grow & Perfect Your Cash-Pay Healthcare Business." Stewart began his career with leading advertising agencies, including J. Walter Thompson, where he marketed Fortune 500 clients such as Wells Fargo and Bally's Total Fitness.



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