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Big Ideas: Healthcare Price Transparency: Patients and Payers Versus Providers?

By Philip Betbeze  
   January 04, 2016

In addition to services that are able to be commoditized, which Mikuckis estimates at 40% of all healthcare services, there are services that are not as easy to commoditize: services provided at centers of excellence for certain types of care, organ transplants, and treatments for certain cancers, where quality and outcomes may trump price quite a bit, he says.

Some providers may be undercharging for those complex services and overcharging for the basic services, he says. An academic medical center, perhaps, shouldn't be charging $2,000 for a radiology service to support charging $30,000 for "service X." Maybe you should cut the price of radiology and charge $50,000 for service X.

"There will be evening out of simple stuff, but if you are a leader in certain complex areas, you should be charging based on the actual cost," says Mikuckis. "And there is a broader piece of it. If you have a better understanding of the cost to deliver and what the market will pay, you can make strategic decisions on what to get out of or grow based on core capabilities you already have in place. Pricing rigor internally can provide valuable input for those broader strategic decisions."

Caveney goes even further on what he says is the shoppable spectrum in healthcare. He says BCBSNC's pricing tool for patients carries prices for about 1,200 procedures the health plan considers shoppable. It's no accident that those 1,200 procedures represent more than 80% of nonemergency healthcare costs, according to BCBSNC analysis.

Mikuckis says the insurer could easily provide prices for up to 5,000 conditions, but there are diminishing returns from going beyond 1,200. "We didn't want to overwhelm the public, and probably will slowly add more and more. We're not trying to shame anyone here. We're trying to do what our customers are demanding."

Cost transparency information may sting in the short run, but it can also benefit providers, Caveney says.

"We have a bunch of providers in North Carolina who can share in the upside if they can demonstrate savings in total cost of care," he says. "The best way for primary care to share upside is to be very careful where they send their patients."

Rather than resist the transparency trend, providers and payers can work together to their mutual benefit—and that of patients, Caveney says. "This is just the way the world is moving. The data are not perfect. Some hospitals do see sicker patients and price is not the end-all and be-all. But we want to improve cost and quality with and for the hospitals and health systems, not in spite of them. That will help keep patients here locally."

Philip Betbeze is the senior leadership editor at HealthLeaders.

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