The limited impact of price transparency on consumer behavior
Healthcare costs are being drawn further into the light as numerous organizations work to create tools to impact consumer behavior and drive competition. However, price transparency is only a piece of the puzzle in managing healthcare costs, experts say.
Current efforts include the recent unveiling of a pricing tool by Blue Cross Blue Shield of North Carolina, and a BCBS report, released last week, that highlights the variation in prices for knee and hip replacement surgeries, both across the US and within markets. For example: in Dallas, Texas a total knee replacement could cost between $16,772 and $61,585 depending on the hospital.
How price variation and transparency impacts the market
"Extreme price variation in healthcare can have obvious financial consequences for individuals and employers as well as serious implications for the sustainability of a US healthcare system that is exceeding its economic capacity," says Maureen Sullivan, senior vice president of strategic services and chief strategy officer for BCBSA.
To help consumers identify hospitals offering both high quality and affordable prices, BCBS companies created the Blue Distinction Centers+ designation, which they say recognizes hospitals that both demonstrate expertise in delivering patient care safely and effectively, and are also 20% or more cost-efficient than non-designated facilities.
Of ongoing price transparency efforts, "It's great that it's all happening," says David Newman, PhD, JD, executive director of the Health Care Cost Institute (HCCI).
"We've all known there's variation in price, and it's good because it means that consumers can save by shopping," Newman tells Healthcare Dive. "When you see on their website that there's variation geographically and within markets—and the BCBS report highlights both—the takeaway is that you don't have to travel to save money. There's as much variation in Dallas as across all the markets in general."
Meanwhile, the HCCI is working toward utilizing data contributed from Aetna, Humana, Kaiser Permanente and UnitedHealthcare to create an unprecedented set of online tools for consumers.
The project is comprised of two websites that will ultimately be integrated, with the first slated to launch next month, Newman says. He describes it as similar in function to the Edmunds.com site for car buyers, except that this one will give consumers the average price paid for specific healthcare services in a particular geography.
Newman says that so far, the site is prepared to provide "reference prices" for 78 different courses of treatment for 42 states and DC.
Later in the year, the second website the HCCI is preparing to launch will help consumers compare their out-of-pocket cost for a particular service at different providers in their region (factoring in where they are in their deductible for the year). This will be open to consumers who are covered by HCCI's participating insurers and will require an insurer-provided account password and ID.
Newman says that price is the easy part of building these tools, whereas factoring in quality is more difficult.
"I think people understand and appreciate that in order to have a well-functioning healthcare market, consumers need information, on quality and price," Newman says. "And that's not all they need to make their decisions."
Price transparency: The silver bullet?
Newman says that while price comparisons provide some incentive to consumers, there's some noise in trying to rank value, and there will always be additional factors such as convenience and referrals from providers, family members and friends. People will sometimes buy differently than insurers think they should, and sometimes they are right to do so, he says.
"Consumers will continue to consume in a manner that they consider most appropriate for them," he says.
Newman adds that there can be pitfalls to asking consumers to focus too heavily on price shopping.
For example, the creation of integrated medical records could be made all the more difficult if patients are running all over town to different providers for different services. If information is then missed or any saved costs are now going into the effort to maintain the record, "they're not real savings and could be counterproductive," Newman said. He also suggested that the sickest populations, who can be responsible for a massive proportion of healthcare spending, may save payers more by putting their efforts toward trying to get well through integrated delivery systems, rather than spending their time trying to price shop.
Newman suggests that price shopping is only valuable for what he calls shoppable, discretionary, schedulable services.
"Some significant part of the spend is not going to be influenced heavily by price transparency," Newman says. "What I tell people is that this is a really important thing to do, but in and of itself, it’s not the silver bullet."
- Blue Cross Blue Shield Association Blue Cross Blue Shield Association Study Reveals Extreme Cost Variations for Knee and Hip Replacement Surgeries
- Forbes Could This Pricing Tool For Consumers Disrupt Healthcare?