The Paths to Price Transparency
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Dregney says the pre-encounter team also spends time educating the patients about how it calculates the price and on how to comparison shop prices against other hospitals. Along with doing the price estimates and working with the insurance companies to identify the patient's out-of-pocket responsibility, the pre-encounter team works with the patients on their portion to see who qualifies for assistance through the organization's customer assistance program or, if uninsured, whether the patient is eligible for medical assistance.
"Customers are doing their own research and trying to find facilities that have better prices," he says. "Some of our competitors have prices posted on their websites, and patients do approach us about them or make comments when our prices seem out of line. Certainly we look at the prices posted by competitors, but we try to educate the patient about this. They need to be asking what the other hospital's price includes; there's a lot that can be put in or left out. … That's why it's really hard for a consumer to compare prices online and not talk to a representative at a hospital."
Bruce R. Burns, senior vice president and CFO at Concord (N.H.) Hospital, agrees, but adds that for price transparency to work and not hurt the bottom line, finance leaders need to have a good handle on their costs per procedure. Concord Hospital, a regional medical center with 295 licensed beds, recognized the need to reassess its costs after an online price comparison of its competitors made it clear that some of its prices were not in alignment with others in the area.
The state of New Hampshire launched the HealthCost price transparency program in early 2007; however, the movement got a slow start in terms of provider adoption, according to research jointly conducted by the New Hampshire Insurance Department and the Center for Studying Health System Change. Weak provider competition among New Hampshire stakeholders was cited as the key reason for lack of impact. "Pricing transparency hasn't gotten that far on the provider side here because we're still trying to work it through with the insurance companies," notes Burns.
Nonetheless, in 2010 Burns and Concord Hospital's director of revenue operations, Wendy Dumais, began looking at the organization's chargemaster with an eye on developing unit costs to help establish more accurate prices to key procedures.
"We are trying to actively understand what our underlying cost basis is so we can make a reasonable assumption that we have fair prices across the board. We also recognize the need to work with our payers so they understand our philosophy around these prices," say Burns.
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