Can price transparency transform America’s health system?

Business News | 27 Mar |

As consumers, we purchase goods and services – from clothes and cars to cable TV and event tickets – based on an analysis of the cost vs. value. In each case, we know (or we think we know) what we are getting for the price we pay.

An unfortunate exception to this rule is healthcare. As consumers, we historically haven’t given much thought to the cost of the care we receive, as long as we have insurance and our premiums are paid. But a movement is afoot to change that, particularly as consumers shoulder a greater individual burden of America’s escalating healthcare costs.

Dr. Ed Clarke is chief medical officer of Arizona Care Network.

Nationally, healthcare now represents nearly one-fifth of the total gross domestic product, and the annual per-person cost of healthcare stands at $10,348, according to 2016 data from the U.S. Centers for Medicare & Medicaid Services. The cost of care continues to rise at an unsustainable rate, impacting us all in the form of higher premiums and deductibles. Employers also are feeling the pain, as employee health plan costs become an even bigger line item in their annual budgets.

Transparency in healthcare is anything but new; a push in this direction has been underway for some time. However, the idea is attracting more attention from healthcare providers, associations, government organizations and even a bipartisan group of U.S. senators who launched a healthcare price transparency initiative.

At issue, they say, is that people cannot make the most cost-conscious decisions about their healthcare based on the information currently available. A case in point: When asked about their concerns with healthcare, nearly two-thirds of Americans say it’s too difficult to find out what medical care costs, according to research presented by the six U.S. senators sponsoring the transparency legislation. As a result, unnecessary tests may be ordered and additional services provided, driving up the cost of care without always improving the outcome.

A good example is the treatment of acute lower back pain. Evidence-based guidelines prove that for the vast majority of patients, such pain will resolve itself within 30 days without taking action. Even so, an immediate reaction by patients is often to request an MRI or a procedure that has little to no measurable impact on their recovery.

This is one reason why price transparency is a welcome change for providers. Transparency helps them reinforce evidence-based clinical guidelines set forth by the U.S. Preventive Services Task Force and their specialty medical societies. Such transparency is good for the larger healthcare industry, too, because it empowers providers to deliver the best medicine.

While everyone agrees that greater price transparency in healthcare is a good idea, driving this change will take some work. On one hand, we must become more educated and empowered consumers to take more personal responsibility for our health, including the cost of our care. At the same time, our physicians must be more cognizant of the relationship between quality of outcomes and the cost of care. This is especially important, given that they are patients’ most trusted healthcare resource.

Research shows that as consumers, we want price information, but the reality is that we rely on our doctor when it comes to making most healthcare decisions. As such, physicians must understand the true cost of the care they provide and operationalize this in their practices by eliminating unnecessary services and tests and openly sharing the cost of care with patients.

That’s where accountable care organizations like Arizona Care Network come in. Our role is to deliver on the Quadruple Aim of high quality, cost-effective care, with satisfied patients and providers. This includes giving patients more health plan options and helping physicians navigate a changing healthcare environment that rewards them based on the quality of clinical outcomes instead of the volume of services they provide. The idea is not to ration healthcare, but to help everyone along the healthcare continuum – from providers to patients – make the best, most cost-effective healthcare choices that yield the best results.

You may be wondering how you can effect greater transparency in healthcare for yourself or your company. It starts with having more skin in the game. As an employer, ask your health plan for a menu of choices for your employees that includes the cost of covered services. As an employee, use technology and other tools to evaluate the cost of services compared to the quality of outcomes. And above all, talk openly about your options for care – along with the cost – with your physician.

It’s true that price transparency alone will not transform the current health system. But by engaging all of the healthcare stakeholders, we can continue to move the system forward in a positive direction.

Dr. Ed Clarke is chief medical officer of Arizona Care Network, a physician-led and governed accountable care organization that improves healthcare and reduces costs by actively managing care for patients. More than 5,500 clinicians participate with ACN, providing a broad range of clinical and care coordination services to adult and pediatric patients in more than 1,800 locations across Maricopa and Pima Counties. For more information, visit www.azcarenetwork.org

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