As employers push harder for their employees to take more control of their health care decisions, hospital prices have attracted greater scrutiny.
Over time, and due to many factors, hospital pricing has become complicated and difficult for many to understand. Basically, any service has specific charges, somewhat like the sticker price on a car. Over many years, some payers, including the government, employers and insurers, have contracted to obtain a discount on these charges.
The media has recently focused on charges and the potential inability of uninsured patients to pay the full amount billed. In reality, this rarely happens. Most hospitals have fair and compassionate payment plans that allow substantial discounts for uninsured or underinsured patients, based upon the individual’s financial circumstances.
Transparency is another issue related to pricing. In July 2004, California adopted legislation mandating that hospitals publish their charges for all services. These lists, commonly called chargemasters, are typically hundreds of pages long and list thousands of services. Following this lead, legislation was introduced in the U.S. Congress in March that would require all hospitals to report the prices of their 25 most common procedures and their 50 most prescribed medications.
At this point, 15 states require public price disclosure and four have voluntary reporting in place. Ohio and the remaining 30 states have no voluntary or required reporting.
Wisconsin and California both have price information available; Wisconsin’s is centrally located on one Web site — www.ihealth.com; California’s prices are available at individual hospitals. A review of both methodologies shows that the data are complicated and difficult for consumers to understand.
The rationale behind the price reporting movement is twofold.
* Arming consumers with price information encourages competition between hospitals, which should lower costs while improving quality.
* Increases in the number of uninsured or underinsured Americans have strengthened the need for greater price disclosure.
While this movement continues to grow, the extent that consumers will actually use such data is unknown. A recent RAND Corp. survey showed that only 14 percent of people who had searched for health care information in the past year reviewed pricing information. Another consumer survey by Blue Cross and Blue Shield Association showed that while consumers are eager for health care information that allows them to shop among providers, they are mainly interested in quality data, not pricing.
Sutter Medical Center in Sacramento reported that when a reporter asked for the list, no consumer had requested it in the previous six months.
Prices become more useful when reviewed in conjunction with quality indicators, which are further along the transparency curve. On April 1, the American Hospital Association and leaders of the Hospital Quality Alliance launched a Web site featuring hospital ratings on individual quality indicators. The Web site, www.hospitalcompare.com, is a voluntary effort, with nearly all (4,200) of the nation’s hospitals participating.
Seventeen quality outcome measures that have been proven to yield pertinent information for most patients are included on the site. Three clinical areas are featured: heart attack, heart failure and pneumonia. The site is designed so that consumers can review data and compare hospitals on the same criteria.
What does this mean to employers? Transparency relative to health care prices and quality add up to value for health care dollars spent. Educated consumers are far more likely to make better choices.
Consumers who use price data along with quality information are far more likely to have a better health care experience than those who don’t. Employers should encourage health care providers to offer as much data as possible.
Alan Bleyer is CEO of Akron General Health System, which includes Massillon Community Hospital, Visiting Nurse Service & Affiliates and RoseLane, a long-term care facility. The system has more than 6,000 employees and 1,000 physicians. Reach him at (330) 344-6000 or www.akrongeneral.org.
