Does Healthcare Pricing Matter?

Elyas Bakhtiari, August 23, 2010

Most patients don't really care about the costs of their healthcare. Or, more to the point: Most insured patients don't directly bear the cost of care, and even if they did, it's nearly impossible to find and compare the price of a given procedure. So most don't bother.

This unfortunate reality is one of the reasons consumer-directed care never really took hold as a primary means for reforming the system. The notion that patients can influence healthcare cost and quality with their dollars has been largely replaced with the notion that payers (starting with the government) can influence cost and quality with their dollars.

Only a little more than one-quarter of CFOs in this year's HealthLeaders Media Industry Survey said consumer-directed healthcare was a primary concern for their revenue stream in the next three years. It's easy enough to see why: Even those that agree with the principles consumer-directed reform have come to realize that the current system isn't transparent enough to send clear market signals.

But as consumer-directed care has faded as a buzzword, the conditions necessary to make it work are growing more prominent. For instance, 22.7% of consumers said they would decide to go to a lower-cost hospital in a recent survey by Professional Research Consultants, Inc. That number looks small, until you consider the fact that it is the highest result PRC has gotten since it began asking the question in 1984. Another quarter of respondents said they would maybe consider hospital pricing, and the overall trend has been toward greater price sensitivity.

At the same time, health savings accounts are adding about 2 million covered lives each year, and many employers are switching to high-deductible health plans in droves to save money. In other words, patients are assuming a little more direct responsibility for the costs of their care.

There's a catch, though. Only about 10% of those who weren't very price sensitive in the survey said it was because their insurance picks up the cost. The vast majority of those consumers, more than 71%, said they don't make decisions based on cost because quality of care is more important to them.

Elyas Bakhtiari Elyas Bakhtiari is a freelance editor for HealthLeaders Media.
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