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Consumer-Focused Pricing Strategies Lacking

By Alexandra Wilson Pecci  
   June 17, 2019

A new report shows 12% percent of organizations offer no pricing transparency options at all.

Hospitals and health systems are neglecting price transparency and market-driven pricing strategies, finds a survey of more than 200 executives.

Kaufman Hall's report, 2019 State of Consumerism in Healthcare: The Bar Is Rising, finds that 12% percent of organizations offer no pricing transparency options at all, and only 10% offer price guarantees.

In addition, only half respond to price quote requests within a defined period; none post their contracted rates for services; and 18% provide clinical staff with transparency tools to respond on-the-spot to patient questions regarding costs for recommended services.

When it comes to pricing strategies, 70% of organizations say they take the traditional route of determining pricing levels by benchmarking commercial payment to the market.

Consumer-focused pricing was one of the "four pillars of consumerism" that the report focused on; the others were access, experience, and infrastructure.

The report concluded that few—just 8%—of respondents rank as tier-one organizations regarding these four pillars, defined as those with a "dedicated focus and resources to building a consumer-centric infrastructure, offering a variety of access points, strong consumer experience, strategic pricing, and price transparency."

Instead, most were either thoughtfully working on consumerism or starting to do so, while a surprising 29% weren't working on consumer-oriented strategies.

That lack of action isn't because of a lack of knowledge.

"It's not that hospitals and health system don't understand consumer needs and wants," Dan Clarin, senior vice president of Kaufman Hall and one of the report's authors, told HealthLeaders. "In our experience, healthcare professionals have a good enough handle on what consumers want."

"However, healthcare organizations have had a difficult time committing to delivering on what consumers want," he said.

For instance, many organizations seem more focused on brick-and-mortar type offerings than on building and delivering consumer-focused services that are less tangible, like digital access.

While the two aren't mutually exclusive, "capital is scarce," Clarin said.

"The recent history of healthcare is that capital expenditures have been heavily weighted toward building projects, sometimes at the expense of significant investment in digital technology," he said. "Return on investment in digital technology and greater consumer convenience are harder to grasp than a new bed tower or ambulatory 'big box.'"

Despite hospitals' slow-moving efforts, consumers continue to expect more from the organizations they deal with.

That's especially true since "being a consumer has become easier for non-healthcare activities, and there are new entrants resetting expectations in healthcare," Clarin said, including non-hospital competitors like CVS Health/Aetna and Amazon.

Alexandra Wilson Pecci is an editor for HealthLeaders.

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