Price transparency: A first step toward true healthcare reform

The growing movement to reveal prices for hospital procedures is just one piece of the healthcare reform puzzle, according to leading experts who spoke Wednesday at The Economist's Health Care Forum 2014 in Boston.

Although price transparency is a critical element to transform healthcare, it alone isn't the answer to the crisis, according to Harold D. Miller, president and CEO of the Center for Healthcare Quality and Payment Reform in Pittsburgh.

"Price transparency is a critical element to reform healthcare. If you don't know the cost of services, how can people choose wisely," he asked. "Price transparency is necessary but it is not sufficient. Price transparency alone is a bad thing."

The problem with current price transparency efforts is that the costs for procedures only reveal a piece of the true cost. Because the industry has a fragmented approach to payment for healthcare services, Miller said the total cost, such as physician services, isn't apparent to patients. 

"We need to provide a total package of care to patients," he said, adding that providers must offer a warranty that includes treatment for complications at no charge. "A total package is easier to evaluate and compare providers."

If the industry wants patients to behave like consumers, it must give them the tools, said Stephen Ondra, senior vice president and chief medical officer of Health Care Services Corporation, a customer-owned health insurer. Those tools include providing information on overall costs, such as out-of -pocket expenses. The payer organization currently offers members information on quality and cost measures for 400,000 professionals and 21,000 facilities accessible on the Web and mobile devices. "This will allow millions to start making good consumer choices," he said.

Leah Binder, president and chief executive of The Leapfrog Group, which ranks hospitals nationally on patient safety, said it's currently difficult to compare prices on procedures at different hospitals because each organization negotiates rates with different payers. "There is no price to compare. There are a hundred different prices and most are secret," she said.

She said her organization supports price transparency, which she considers a powerful and important movement in healthcare, as significant as the Affordable Care Act. "Leapfrog focuses on quality and safety but that's the second question people ask. The first is the price point. The second is what are the benefits? It's like buying a car. And that's exactly what we are seeing in healthcare. Price transparency is the gateway to a far more informed, active consumer."

Dave Mason, senior vice president, RelayHealth Financial, McKesson, agreed with the other speakers that that true price transparency is just a piece of the puzzle. "Without quality and different segmentation," he said, "pricing is immaterial. Until I know what I'm buying and what I'm receiving, it doesn't make a difference."