The significant variation in pricing for healthcare continues to make headlines as patients begin finding ways to compare pricing in an effort to make informed choices about where to receive care. Data showing details about hospital pricing, and that of nearby facilities, can help administrators identify how they stack up against the competition and make sound decisions about their business model.
Details about the varied pricing for healthcare made headlines in May 2013 when the Centers for Medicare and Medicaid Services (CMS) released Medicare cost data for 3,300 hospitals. This marked the first time that pricing details have been shared with the public.
The CMS data showed that hospitals charge drastically different amounts for services. A New York Times article explaining the disparities said the charges were sometimes 10 to 20 times what Medicare typically reimburses for the same procedure. Also, the CMS data showed significant variations not only regionally, but even among hospitals in the same area or city.
Media outlets across the country reported pricing disparities in their communities, causing neighboring healthcare providers to take closer looks at their pricing compared to the competition.
“Hospital administrators’ eyes were opened as they realized that the public’s ability to access and analyze CMS data could greatly impact the future of their hospitals,” said Eugenia McWilliams, CEO of RealTime Medicare Data (RTMD), a healthcare analytics company based in Birmingham, Alabama. “When this data was released, patients were immediately empowered to make educated decisions based on cost about where to receive care.”
She added that this, along with changes to CMS reimbursement regulations and the passage of the Affordable Care Act, has made data an ally to the business side of healthcare.
It is no secret that the healthcare industry relies greatly on data for determining how to grow business and protect the bottom line. RTMD provides its healthcare clients with Medicare claims data that is the most current available, thus removing the guesswork from how a hospital can best grow, avoid risk, create efficiencies, and even competitively price services.
Public demand for consistent pricing is growing
The public continues to put pressure on the healthcare system for more consistent pricing. JAMA Internal Medicine reported on a project begun by a group of California journalists in June 2014 that invites consumers to enter their healthcare costs into a searchable online database.
Called PriceCheck, the initiative’s objective is to crowd-source health costs for four specific procedures: screening mammograms, lower-back magnetic resonance imaging (MRI), intrauterine devices (IUDs), and diabetes test strips.
The public provided varied costs to the ClearHealthCosts.com website. For instance, some women reported being charged copays when they should not have been. And in the Los Angeles and San Francisco Bay Area regions, commercial insurers paid from $128 to $694 for screening mammograms.
Physicians and other healthcare professionals contributed their pricing to the project, wondering where quality fit into the conversation.
The JAMA article shared that in other sectors of the economy, people often equate higher cost with higher quality, but in healthcare it is widely accepted that there is no correlation between the two. Ultimately, consumers want healthcare services at fair prices.
“A movement toward a more informed patient is underway,” McWilliams said. “If providers stay aware of statistical details at their facility and at their competitors’ facilities, they will prevail and gain market share.”