How Hospitals Can Compare Prices, Despite Not Having a Consumerism Model

The inability to compare prices is an often-cited reason for why healthcare hasn’t fully evolved into a consumerism model — patients don’t comparison shop among healthcare providers, using price as a significant factor in decision-making like they do when comparing other purchases.

The inability to compare prices is an often-cited reason for why healthcare hasn’t fully evolved into a consumerism model — patients don’t comparison shop among healthcare providers, using price as a significant factor in decision-making like they do when comparing other purchases.

So when the Centers for Medicare and Medicaid Services (CMS) rolled out a regulation that required hospitals to post their “chargemaster” rates online, as of Jan. 1, 2019, it was another experiment in creating a more price-aware environment.

Nearly a year later, the introduction of chargemaster data into the public sphere has had no discernible impact on use. The structure and volume of chargemaster data made comparisons too difficult, and the results too generalized to be predictive of the costs an individual with insurance would incur.

  • So will pricing information ever become a significant part of consumer decision-making?
  • Yes, although it remains several miles down the road, and likely will stay limited to services with less likelihood of medical complications, which adds in additional services and costs.

The most likely source of the data will be health plans that can associate its member’s benefits and the rates defined in plan-provider contracts to provide an estimate.

If the plans take it one step further and compare facilities within a geographic radius to present consumers with options, will that influence choice? And should pricing be a determinant of choice when other factors, such as provider expertise and facility quality, are also considerations?

It can be helpful to think of the CMS’ requirement of January 2019 as a directional change that opens the door to greater pricing scrutiny. Chargemaster rates are like “list prices” in the same way a hotel has list prices, but guests rarely pay the full amount. But that rule was just the first in what is likely to be a series of rules under consideration that will gradually pull back pricing layers until they become meaningful at a consumer level.

One rule — under consideration, but not finalized — would force hospitals to make public their standard charges, including payer-specific negotiated prices, in a format that is both machine-readable and “consumer friendly.” That would represent a significant expansion on price transparency. Assuming this rule is challenged in court, implementation likely will be delayed past its proposed January 2020 effective date.

One thing is certain: The external environment is shifting on price transparency.

If you are unsure where your facility falls on the cost spectrum vs. competitors, a data analyst can compare chargemaster data as one way of establishing context. Armed with this information, you can open the door with leadership to discuss this coming chapter in price-based competition.

The Upstream Healthcare Audience Puzzle

In healthcare marketing, it’s often assumed high-visibility, consumer-facing communications are the primary areas of focus. But the healthcare ecosystem is complex, and there are multiple upstream influencers who determine the total number of consumers eligible to come to your hospital or physician network for treatment.

In healthcare marketing, it’s often assumed high-visibility, consumer-facing communications are the primary areas of focus. After all, the response rates to these campaigns drive the Return on Investment (ROI) metrics shown in quarterly reports. But the healthcare ecosystem is complex and there are multiple upstream healthcare influencers who determine the total number of consumers eligible to come to your hospital or physician network for treatment.

Changes in influencer priorities or relationships can dramatically decrease or increase your pool of commercially insured prospects. So, a strategic approach to marketing requires being mindful of these upstream stakeholders, crafting aligned audience-based messages and conducting focused outreach that keeps your brand as a ‘must have’ in their decision-making.

Where Upstream Healthcare Influencers Come Into Play

For example, let’s say there’s a long-established manufacturer in your market with 500 employees. It’s considered one of the best places to work because of advancement opportunities and good pay, so people stay a long time. Because of that, the workforce’s average age has drifted up into the 40s. Some still use maternity services, but the claims history now includes more high blood pressure related encounters, hip/knee replacements and oncology care.

The cost of claims to the insurer rises to over 85 percent of total premiums paid by employer and employee. Months ahead of open enrollment, the insurer proposes a significant rate increase to the broker the company has relied upon for years. The company’s CFO strenuously objects because the increase would squeeze its margins, forcing it to raise its own prices or cuts costs elsewhere.

The haggling between employer, broker and health plan begins in earnest and trade-offs are explored. These usually involve changing benefit structures, but in some situations, the manufacturer will change insurers completely or move to a narrow network product.

If your doctors and hospitals are ‘high performing’ and remain in-network, this can be a growth opportunity. For everyone else, that workforce and all those dependents just became unpersuadable through consumer advertising — they simply won’t pay out-of-network rates to come to you.

I’ve seen these volume shifts undo the progress made through consumer-directed outreach.

How do your physicians, hospitals — and your marketing — influence this chain of events?

Yes, much of it is based on hard data about per-encounter costs, clinical quality, chronic illness management and readmission rates, but negotiations also have a perceptual side. What’s the awareness and perception of your organization among these influencers?

Here’s where a marketer’s expertise can help:

Existing Patients/Members

Help your organization achieve quality and patient engagement goals by using your knowledge of persuasive techniques to improve shared-decision making efforts. According to Health Affairs, patients who are not engaged in their care incur costs up to 21 percent higher than patients who are very engaged.

Additionally, even small improvements in medication adherence, appropriate use of the Emergency Department, handwashing and post discharge follow-up appointments with Primary Care Physicians can pay off noticeably in quality and cost metrics.

A marketer’s understanding of patient experience mapping, consumer psychology and communications tone can support patient and staff engagement efforts. Touch base with clinical and case management leaders and offer your help.

Employers

In the U.S, half of health insurance coverage comes through employer-sponsored plans. The yearly determination about benefits is a serious discussion that involves human resources/benefits, as well as finance/administration.