Why Swedish Health Services slashed its outpatient prices

At a time when healthcare prices continue to rise, Swedish Health Services in Seattle cut its prices for the large proportion of its outpatient services by an average of 35 percent earlier this year, according to a report by the Heartland Institute. 

Swedish cut prices for 90 percent of its outpatient services provided at five hospitals, two ambulatory care centers and 100 clinics across the Puget Sound area. Some particularly pricey services, such as MRIs, were cut from $6,100 to $1,810, a 70 percent price reduction, according to the report. The cuts went into effect at the start of this calendar year.

The price reductions were not due to the Affordable Care Act (ACA), but because of competitive pressures, according to Heartland, a right-of-center think tank that embraces free market principles. "Providers of services, whether it's healthcare or cell phones, will reduce prices when they know consumers have real choices and can take their business elsewhere, not when people's options are restricted or limited by federal law," Paul Guppy, research director of the Washington Policy Center, told the Institute.

Lawmakers in Washington State passed two bills last year making providers more price transparent, FierceHealthFinance previously reported. They included a bill that would allow consumers to access some price and quality data directly from their smartphones or tablets. And in 2013, the state received a $3.4 million federal grant to analyze insurance claims with the intent of promoting greater price transparency.

Although Nathan Benefield, vice president of policy analysis at the Commonwealth Foundation, told Heartland that there has been resistance to moving toward price transparency, he noted that "there are other efforts--things like low-cost health clinics and cash-only providers--moving to provide healthcare alternatives and compete for patients with lower prices."

In an article published last year in the Puget Sound Business Journal, Swedish attributed the price reductions primarily due to internal cost-cutting, including layoffs and the elimination of its home healthcare business. The healthcare system has been "working pretty hard on reducing our cost and improving our efficiency," Ralph Pascualy, M.D., chief medical officer at Swedish Medical Group, told the Business Journal. None of the cuts applied to inpatient care at Swedish hospitals. And for those patients who have insurance, it is up to their individual carriers to decide to pass the price cuts to them, according to the article.

To learn more:
- read the Heartland Institute report 
- check out the Puget Sound Business Journal article

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