New data says that health costs have not outpaced the rate of inflation this year, so what can CFOs do?
New data has been unveiled indicating that health costs have not outpaced the rate of inflation this year.
But what does this mean for hospital and health system CFOs? Read on to find out.
The report published by Turquoise Health utilized the list of CMS' 500 shoppable services. To understand the price dynamics of these shoppable services, the report dove into its payer dataset, which contained negotiated rates between payers and providers for all covered services across insurance plans and locations. Payers included UnitedHealthcare, Cigna, Aetna, and Blue Cross Blue Shield.
As of the third quarter's conclusion, there has been a 2% increase in negotiated rates for all 500 shoppable services, aligning closely with the 1.9% U.S. inflation measured by the PCE price index.
Notably, this growth rate remains below the overall U.S. inflation rate determined by the Consumer Price Index. The report highlights specific areas of notable price increases, such as Chickenpox and Measles vaccines, while identifying deflationary trends in services like off-hours medical services, allergy tests, and vaginal deliveries.
For example, in Los Angeles, the negotiated rate for vaginal delivery with post-delivery care varies widely, ranging from $1,183 to $32,563.
What does this mean?
It is crucial for hospital CFOs to recognize that substantial price variations exist for the same care both across different cities and within the same markets, as revealed by the report.
Understanding and addressing these variations is imperative for hospital CFOs to navigate evolving reimbursement landscapes and ensure financial stability.
As the healthcare industry undergoes increased scrutiny on pricing transparency, proactive strategies to manage and standardize costs will be pivotal for financial sustainability.
But where to start? Adoption of the price transparency requirement is key.
It will likely take some time before there is a widescale adoption of that type of pricing feature by providers, but hospitals shouldn't skip steps in the meantime by not doing their part to be as transparent as possible to patients.
"The higher percentage of completeness regarding the publication of machine-readable files and accurate patient estimate tools, the closer we are to empowering patients to gain confidence in knowing how much their healthcare services will cost," Chris Severn, CEO of Turquoise Health, told HealthLeaders.
"Adherence from both hospitals and payers also eliminates a significant burden of negotiating new rates because all rate data will be publicly available, meaning fair rate calculation becomes simpler and accessible," Severn says.
"Overall, these lead to lowering the cost of healthcare."
Amanda Norris is the Director of Content for HealthLeaders.