Hospital leaders must acknowledge they're losing the war over price transparency

Wars often take years to play out, and assessing their historical impact can take decades. One of the most important factors is determining a turning point. In World War II, it was the battle of Stalingrad. In the Civil War, it was Gettysburg.

Providers in general and hospitals in particular are losing so many battles in the war on price transparency so swiftly that really, the only thing left to determine is whether they represent a turning point or just a swifter acceleration toward the inevitable.

The most recent one was the Obama administration's decision to okay the use of reference pricing. That means if payers want to affix a payment limit on a certain procedure, such as a hip replacement, they can do so as long as it doesn't restrain patient access to care. Expect insurers to start doing so with all deliberate speed.

The action would leave patients on the hook for the difference, even if it is tens of thousands of dollars. Hospitals can try and collect those sums if they wish, but it will be so time-consuming, costly and so far from their missions that I suspect it will simply be easier for them to both lower--and publish--their chargemaster prices in order to compete for business.

There was also the recently issued study by the Center by the Center for Studying Health System Change and published by the Gary and Mary West Health Policy Center concluding that price transparency would save Americans $100 billion in a decade. The West Policy Center said it would work with the University of New Hampshire to create a template for the state-by-state all-claims databases required to achieve transparency.

Those developments were just in the past couple of weeks. There was also the decision last month by the Centers for Medicare & Medicaid Services to finally publish what doctors collect for performing certain procedures. That occurred less than a year after the agency published what it pays hospitals for 100 common procedures.

Those are just many of the current skirmishes on the price transparency front. And as I have previously reported, there are a variety of private-sector firms looking to bring greater price transparency to patients.

Hospitals have some choices. Obviously, they can use their powerful state and national lobbying groups to continue to resist transparency, something that I recently noted the California Hospital Association has done for years. But like those nations that continue to wage battles long after the war has been lost, hospitals will damage their ability to set some of the terms of surrender down the line. And given that patients have endured co-payments and other out-of-pocket costs heaped on them during the last dozen years, they're going to be in a reparations-demanding mood if such behavior persists.

Instead, hospital executives should acknowledge that the era of $100 saline bags and other ridiculously overpriced products and services is coming to an end--if not swiftly, at least in fits and starts. Money will likely be left on the table as hospitals executives begin to adjust to these new realities, but other opportunities will present themselves.

Hospitals should now focus on how to use price transparency to attract more patients. The Surgery Center of Oklahoma City has made its completely open and comprehensive price list a selling point with employer groups throughout the state and medical tourists elsewhere--while other providers in the region have remained mostly mum. It's time for the rest of the providers to overcome their fear of doing something different and begin competing in a clearer manner.

Granted, radical changes like this take time--the Marshall Plan after World War Two lasted for a decade. But those institutions that continue to take to the battle lines on this issue are only going to lose a long and grinding war of attrition. It is one that will mean the eventual loss of most of their patient base, much of their capital and the one thing that a defeated foe in a war that holds out for too long always loses--a way of life comparable to the one before the war started. - Ron (@FierceHealth)