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Health Systems Can’t Afford to Avoid Price Transparency

By Tim Barlow | October 20, 2021 | 1 Comment

MarketingCustomer Acquisition and RetentionCustomer ExperienceCustomer Understanding and Marketing Execution

The pricing transparency rule for hospitals may have gone into effect back in January, but compliance has been low – less than 6% of systems, as of July, according to Bloomberg Law. And while fines for non-compliance are getting stiffer, the highly complex and variable nature of medical costs, means that fines alone may not provide enough incentive to allocate the internal resources necessary to build out functional pricing transparency.

There is however another more powerful reason to fully embrace the rule, and that’s consumer demand.

Roughly 60% of Americans agree that they’re always concerned about having enough money, and health-related expenses play a major role in fueling this overarching sense of financial insecurity. Previous Gartner research has shown that medical-related costs are the single biggest cause of financial anxiety among consumers, superseding other financial concerns like paying the monthly bills or saving for retirement. Newly published Gartner research adds further detail, showing that almost half of consumers (45%) say they are worried that unexpected medical and healthcare costs will hurt their financial stability and forty-four percent say they’re even worried about routine or expected healthcare costs. What’s more, this percentage of worried consumers remains unchanged when the uninsured (~7% of the total survey population) are removed from the dataset.

These findings underscore the two-pronged nature of concern surrounding healthcare costs: yes, there’s an element of not being able to control when we’ll need healthcare and thus incur costs, but just as concerning is the mystery of what costs will be like, even for expected procedures and treatments.

Due to the role healthcare costs play in consumer’s overarching levels of financial anxiety it should come as no surprise that fears over incurring such costs are causing people to avoid seeking out medical attention. According to Gartner’s annual Consumer Values and Lifestyle quantitative survey, 28% of people have not gone to the doctor within the past six months, despite having a medical issue or concern, because they were concerned about not being able to afford the visit or treatment. In a separate survey of Gartner’s Consumer Community, this same percentage of respondents, 28%, said that fear of incurring costs has kept, or is keeping them, from seeking medical attention, and 30% said that this fear has caused them to forego certain elements of their healthcare, such as recommended testing. These implications – stemming, at least in part, from a lack of price transparency – directly undermine progress against common health system goals like refilling the patient funnel and improving population health.

However, the good news is that while costs and fears over affordability are a leading challenge, their dominant role within the patient journey also means that any progress against these challenges can yield proportionally positive gains. Gartner research shows that for a majority of consumers, cost is the primary factor when making healthcare decisions. But, a staggering 89% of respondents said the industry needs to do more to clearly communicate costs, and 52% said providers are most responsible for delivering such information. Perhaps most compelling of all is that a majority of consumers say they would be more likely to seek out medical treatment if they knew the out-of-pocket costs upfront.

To date, most consumers have reluctantly accepted a reality in which a clearer understanding of medical costs prior to seeking treatment isn’t an option, but the tide is changing. Search volume on the topic is up significantly in 2021, with terms like: “hospital price transparency” (+48% YoY), “medical price transparency” (+50% YoY), and “CMS price transparency” (+85% YoY). Plus, as gradually more systems become compliant with the transparency rule, making costs not just available, but usable and comparable, consumer demand will transition into expectation and cost consideration will become a more established part of healthcare decisions. Now is the time for health systems to build out pricing transparency tools and position them earlier in the patient journey or risk falling behind competitors and losing out an expanding group of potential patients.

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1 Comment

  • HealthTimes says:

    Great article source to read. Thank you for sharing this info.