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Price transparency
in healthcare and
medical services:
How providers
can contribute

Author: Megan Williams

The Centers for Medicare and Medicaid Services' deadline for hospital price transparency finally rounded the corner on January 1, 2021. It's been a long road, pitted with delays, criticism from all corners of the industry, and a lawsuit from the American Hospital Association.  Price transparency in healthcare and medical services is getting a lot of attention.

The journey to cost transparency in healthcare is proof of just how disruptive the concept is to the healthcare space overall. To move forward into a future of more transparent pricing, provider organizations across the board will benefit from understanding the value and impact of cost transparency in healthcare and reviewing the steps they'll need to make for measurable progress—like the role that artificial intelligence (AI) can play in delivering data insights to support cost transparency.

What is Price Transparency in Healthcare?

Price transparency efforts assume more open pricing will tap into market forces, encouraging patients to consume healthcare more like they do goods and services in other industries, and eventually, lower costs. Recent efforts toward cost transparency in healthcare are simply a continuation of previous initiatives to clear up the murky world of cost and pricing in healthcare—prior rules simply required hospitals to post their charge masters online. But these documents proved to be minimally useful at best for patients who have to navigate complex treatments, provider relationships, and insurance contributions and processes.

Why price transparency in healthcare matters

According to the Peter G. Peterson Foundation, the United States has some of the most expensive healthcare in the world, spending around $11,000 per person and 18% of the gross domestic product (GDP) as of 2018—a number up from 5% in 1960. Those numbers are expected to rise to $18,000, or 20% of the GDP, by 2028.

At the same time, the patient portion of healthcare costs is skyrocketing. In 2018 alone, patient financial responsibility jumped by 12% for inpatient, outpatient and emergency care. This happened even as consumers are migrating to lower-cost options. Patients are now the third-largest payer to providers, trailing only behind Medicare and Medicaid.

With patients driving an increasing portion of healthcare expenses, having more insight into the costs, and more specifically, the price of healthcare services can help them make more economic choices. This, in turn, can help providers adjust service line offerings and marketing efforts to improve healthcare business outcomes.

Technology Supporting Price Transparency in Healthcare

As providers work to provide their care communities with true price transparency, they should consider existing and maturing technologies that help them get the most out of their data and build trust and loyalty from their existing patient relationships.

New Applications of AI

Patient empowerment means supplying patients with more data. But it also means new levels of support for those patients who are looking for clear estimates and helpful information. AI can help bridge the gap between pricing tools and an exploring public. Solutions like IBM Watson have been used to understand local customers (through market-specific data) and power treatment cost calculations that engage patients while supporting price transparency in healthcare.

Smarter Finance Decisions for Price Transparency in Healthcare

Patient healthcare shopping habits will begin to align with their behavior in other industries, so hospitals and health systems will likely benefit from investing in healthcare finance analytics tools that support functions like margin analysis and cost accounting. These will be critical to tracking which service lines are the most profitable and deciding how they should market to patients. This type of solution lives and dies by strong data integrity—a benefit that will reverberate across any healthcare enterprise.

Learn more about how 5G and edge compute can support real-time AI across an ecosystem of healthcare data and ways that you can shape the future of patient care.