A Brave New World of Transparency

July 25, 2014
William Balfour
Randy Bury, Vice President, Advisory Services

Randy Bury, Vice President, Advisory Services

Do you know how much a gallon of milk costs? Sure, it’s posted right under the product in any grocery store. Does the price change if you go to Kroger, Costco, or Wal-Mart? What if the price listed in the store wasn’t actually the price you paid at checkout? And what if Wal-Mart wasn’t allowed to know the price at Kroger? What if the price you paid wasn’t listed anywhere and depended on some other factors like how many gallons you bought, what else was in your cart, how old you were, the day of the week you bought it, or how much milk your parents bought growing up?

As silly as this sounds, it is exactly how consumers have experienced healthcare for a very long time.

Consumers want transparent knowledge to compare prices and quality

In the rapid progression of consumer-driven healthcare over recent years, there has been an outpouring of raw, unfiltered, non-contextualized information. It was information previously guarded, not to deceive the consumer, but because people who work intimately within the healthcare field know that our current system is so convoluted and complex that it is challenging to understand the variables that go into the delivery of healthcare by simply looking at the numbers.

Today, providers must learn to adjust so that their numbers talk — with intelligence and accuracy — for themselves. Some of this transparency will be forced through the expanded public release of charge and payment information from CMS while others will be led by hospitals themselves in an effort to meet customer expectations. Even insurers have partnered to consolidate payment databases and make them available for public consumption.

Now I am usually the first person to highlight what is missing contextually from any of these “data dumps” and how misleading it can be to the consumer, but right now, the consumer doesn’t care because any information is still viewed as better than none. The onus is clearly on healthcare providers to ensure consumers have accurate information to make informed decisions on cost versus quality of care. Hospital executives must be able look across their population, payments, and costs with the confidence to highlight areas where they are better than the industry average and working to close the gap in areas where they are not.

Consumers are listening (and shopping), so be sure they have the right information in the right context. If you’re lost on where to begin with transparency, here are four suggestions to get started:

  1. Establish a defensible pricing strategy and work to publish a common procedures price list for public consumption
  2. Have a communication channel to field inbound questions from savvy shoppers
  3. Have an outbound communication plan: build and share the storyboard for your hospital’s unique value proposition
  4. Know, and be able to defend, your cost structure. If you can’t defend it to internal audiences, payors, and patients, it’s time to change it.

We’ve also got a couple of great resources iVantage INSIDERs on price transparency and managed care contract optimization which are well worth a read.

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