Greater Price Transparency Coming to Medicine

The Kaiser Network sponsored a webinar today called Ask the Experts, Price Transparency, about the drive to make the price of medical care more transparent to consumers. It’s an interesting discussion about something that is vitally important to our lives, consumes a huge chunk of the economy, and almost no one truly understands from a pricing perspective.

The webinar discusses an experiment in the Cincinnati area under which consumers and providers of health care would see a list of prices for certain types of office visits or procedures for individual doctors, compared to an average for similar doctors and procedures. The experiment also included some type of quality of care metric. Naturally, the insurance viewpoint was excited about this, as it could help drive down costs. The doctor’s representative was less excited, making the valid point that simply because one doctor charges more than another for a certain type of visit, the consumer still can’t tell what the overall cost of treatment will be. There was more discussion about the effect of deductibles and deductible limits on price sensitivity and consumer behavior, as well as the disproportionate amount of money spent on terminal patients.

I actually didn’t have time to listen to the entire talk, but something tells me they did not come up with a perfect solution in the last minute (it’s a discussion, not a TV show, after all). Ready or not, however, health care professionals need to prepare for greater price transparency. This experiment was led by an insurance company, but as consumers have to pay a greater portion of their healthcare costs, they will take greater interest in pricing, and the internet will provide them a platform for discussing and comparing their options. Consumers will also insist that if they have to pay for health care, the system should do a better job of accommodating them, rather than revolving around insurance companies (readers from insurance companies may beg to differ). Health care organizations, both providers and insurers, that revolve around the patient will have better insulation from pricing pressures than those that continue to revolve around insurance claims.

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