A campaign promise and market forces are placing mounting pressure on healthcare providers to give meaningful price and quality information to patients.
Boosting price transparency is one of the few specific healthcare reform proposals President Donald Trump made during the 2016 election campaign and healthcare finance executives are bracing for the challenge.
Now that he is in office, "transparency in healthcare is not going away. It is not a flavor of the month," says Amy Floria, CFO at Goshen Health in Indiana.
But efforts by individual states to advance price and quality transparency by providers have gained little traction across the country. Last summer, the vast majority of states received failing grades in a report card on transparency laws published by a pair of nonprofits—the Health Care Incentives Improvement Institute and Catalyst for Payment Reform (CPR).
There are compelling reasons to strive for price and quality transparency in the healthcare industry on a national level, says Suzanne Delbanco, PhD, executive director of CPR, which is based in Berkeley, CA.
"One is the impact that it can have on the healthcare marketplace, and the other is to provide practical information for individual consumers who need to make decisions."
On a national scale, she says, having a price and quality information tool "would allow us to see variation both across and between markets for quality and price. It would potentially support greater competition because it is possible that healthcare providers would no longer view competitors in their local market as the benchmark for pricing and look further afield."
'It Is Not Easy'
But the challenges involved in establishing price and quality transparency at healthcare providers are daunting.
"Number one," says Floria, "interpreting the information can be very difficult."
Two, I would love to know, when you go to some of these transparency websites, how many people actually know what their deductible is—what their maximum out-of-pocket cost is and whether they have met it?"
She says the accuracy of the information "is a huge complexity that providers need to figure out and overcome. It is not easy. If it [were] easy, more people would have figured it out by now."
Memorial Healthcare System has been figuring out how to provide price and quality transparency for its patients with a set of online tools for about three years. The Hollywood, FL-based health system launched an online cost estimator and quality assessment tool in December 2014, and it plans to have similar online capabilities available for insured patients by April.
Stanley Marks, MD, FACS, senior vice president and CMO at Memorial Healthcare, says the organization has solved many of the problems associated with healthcare transparency with a firm commitment to giving patients accurate and decipherable information about the price and quality of services.
"There was a time when I thought the cost equation was going to be much easier to project than the quality equation; but frankly, they are both extraordinarily difficult."
"The federal government has tried to standardize quality reporting using their [Centers for Medicare & Medicaid Services] metrics, and those are huge challenges," says Marks.
"The data that comes from the federal government is very complex and very difficult to understand—certainly for the average consumer. The data is hard enough for those of us who earn our livings understanding and producing this type of data."
Despite the obstacles involved in giving patients real-time information about the price and quality of its services, the leadership team at Memorial Healthcare has determined that the effort is essential to the organization's long-term success.
"If you are not showing and being transparent about both price and quality, you are not going to be able to practice healthcare. Those organizations that are in the forefront and are trying to provide transparency in a way that lends a level of clarity to both the quality and the price of services will clearly be the winners," Marks says.
Regulatory vs. Market-Oriented Approaches
While Trump favors increasing healthcare transparency, he has not said whether this goal should be achieved through regulation or market forces.
If the Trump administration and Congress embrace a regulatory approach, Floria says healthcare providers should be able to rise to the challenge if new regulations build upon successes achieved in states such as New Hampshire, which received an "A" grade for state price transparency laws in 2016.
"If President-elect Trump came out and said we have a year to figure out how to provide a cost estimate at time of service for out-of-pocket costs and the price that a patient's insurance is going to pay, healthcare providers would figure it out, as long as the language was to provide a reasonable estimate," she says.
"I am not someone who advocates for national regulation on pretty much anything; but if it came to pass, we would toe the line and figure out a way to do it just like every other regulation that has come down the pike in healthcare."
"National regulation may be what it takes to make transparency in healthcare widespread," says Floria.
"But before national regulation comes out, there needs to be a lot of conversation with providers in states where transparency is working well to see on a national level how we can have similar requirements, with some flexibility, too."
In addition to regulation, Floria says the federal government could take "carrot or stick" approaches to cajole or prod states to adopt healthcare transparency laws.
"One way the federal government could require states to pass transparency laws is to say they will not provide Medicaid funding if states do not meet the minimum requirements of price transparency. Another way to do it would be to increase Medicaid funding to states that pass transparency laws—that would be better," she says.
Matthew Muhart, executive vice president and chief administrative officer of Memorial Healthcare, says he is resigned to the inevitability of new regulations mandating healthcare transparency but asserts market forces can and should be the primary drivers of change.
"There will be regulatory approaches—regardless of whether they are good, bad or indifferent," he says. "The government realizes that the current methodology in terms of data reporting is not perfect. They will continue to try to improve that."
"The government also needs to listen to the industry. For those of us who have been making attempts at establishing transparency, the government needs to look at those attempts and incorporate them into whatever the regulatory schema will be in the future," Muhart says.
The thrusting of patients into a more active and financially committed role in their healthcare is unleashing market forces that are on the verge of making transparency an unavoidable feature of the way health systems, hospitals, and physician practices function, he says.
"I strongly believe that market forces are the greatest lever to moving transparency to a national scale. If, in fact, we are in an environment where more and more of the healthcare spend is not in the form of premium, per se, but more in the form of out-of-pocket spending at a transactional level, market forces will drive transparency across the country more than anything."
Christopher Cheney is the CMO editor at HealthLeaders.