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Providers must clarify pricing as patients adopt consumer role

Blog Post03/12/2014

Healthcare is one of the last bastions of consumer-unfriendly billing and pricing. Patients generally have no idea what a treatment is going to cost or that medical estimations are available, what options they have to keep costs down, and ultimately what they and their insurance companies have actually paid.

Murky pricing was just about acceptable so long as the real paying customer was the employer. But now that individuals are starting to take on more responsibility for premiums, deductibles and co-pays, they are increasingly demanding more transparency. And providers will be forced to respond.

That is the message coming out of TransUnion’s recent survey of over 1,000 insured healthcare consumers. According to the survey, when patients choose healthcare providers, they start by looking for world-class specialists and technology. But ranked a close second is easy-to-understand costs, which is valued higher than quality scores and proximity. Ranked fifth is clear billing. The survey also reveals a strong correlation between patients’ perception of the quality of care and their satisfaction with the whole billing process.

What’s more, over half (55 percent) of all patients surveyed have started paying more attention to the details of their medical bills over the past year, and two-thirds want to have a complete overview of the costs of care – those that their insurance plan covers, as well as their own out-of-pocket costs.

It’s not surprising that people are more acutely aware of costs with constant public discussion about the Affordable Care Act and the need for greater efficiency. But the pressure for more transparency won’t go away once the media frenzy is over. For a start, ACA will bring even more individual payers into the system beginning next year. But, more importantly, “consumerization” is a structural trend affecting all businesses, driven by technology that allows instant online comparison of prices and features. No-one makes sizeable purchasing decisions these days without weighing up cost and quality – except in healthcare.

Providers often claim that healthcare is different. But behind the multiple bills and pricing levels, there is a worrying fact – hospitals and physicians cannot provide, and sometimes do not know, the real cost of procedures. With pressure increasing from payers to reduce prices and from patients to clarify them, finding a way to understand costs and then focus on greater transparency will be unavoidable.