Transparency in Healthcare and the Rise of Healthcare Consumerism

Transparency in healthcare

Most people wouldn’t think of buying an expensive item, such as a car or house, without performing extensive research and price comparisons. Yet, when it comes to healthcare services – a major expense for many – comparison shopping has historically been non-existent. This is due, in part, to a lack of transparency in healthcare.

If you requested a written estimate for a medical procedure, many doctors and healthcare facilities would consider it a nuisance. Worse, due to the lack of coordination and transparency between service providers, insurance companies and other key players in the industry, they probably couldn’t provide an accurate estimate even if they wanted to. Fortunately, transparency in healthcare is beginning to change with the advent of healthcare consumerism.

What is healthcare consumerism?

Healthcare consumerism is a movement designed to make the delivery of healthcare services more efficient and cost-effective. It accomplishes this by putting the purchasing power and decision-making in the hands of participants. More than just a movement, healthcare consumerism represents the future of the healthcare industry. Its goal is to enable patients to become fully involved in their healthcare decisions; by doing so, it places the same pressures on healthcare service providers that exist in virtually every other industry, which is to deliver the highest quality at the lowest price.

In the traditional healthcare delivery model, patients tend to pay little attention to the cost of services. To develop more conscientious healthcare consumers, key stakeholders – including healthcare, tax and benefits professionals and employers – are starting to provide the information, financial incentives, and decision-making tools patients need to make educated healthcare purchasing decisions. This, in turn, requires a high degree of transparency between everyone involved in the delivery and management of healthcare services. As this becomes the norm throughout the industry, everyone from patients to physicians to insurance providers will benefit from:

  • Higher quality medical care
  • Improved patient outcomes
  • Lower operating costs for hospitals, medical practices and individual physicians
  • Better control over the spiraling costs of healthcare insurance
  • More efficient administrative process, such as billing and patient record-keeping

Most importantly, healthcare consumerism can lead to lower costs at all levels of healthcare delivery.

What is transparency in healthcare?

The answer to that question depends on who you ask. While all healthcare stakeholders agree on the need for more transparency, the term has a different meaning for each group.

Transparency for consumers

Today’s healthcare consumers must contend with high-deductible health plans and higher out-of-pocket expenses. Transparency equates to having ready access to information about quality and cost. With this information, consumers can make informed decisions – including the ability to compare service providers – to get the best services at the best price.

To improve consumer transparency, payers (insurance providers) are starting to make it easier for patients to determine costs. Many now provide a cost estimator application on their websites so patients can get a reasonably accurate idea of the cost of treatment or procedure. Health systems have also begun publishing quality information on their websites so consumers can make quality-of-service comparisons before choosing a provider.

At the same time, Health Savings Accounts (HSAs), Flexible Savings Accounts (FSAs) and Health Reimbursement Accounts (HRAs) provide consumers with tax-advantaged financial tools which get them more involved in their healthcare decisions. Using these accounts to pay for healthcare expenses enables consumers to gain a better understanding of their healthcare costs.

Transparency for physicians

In the traditional healthcare model, physicians have no financial responsibility for the quality of care delivered by their referral partners. With increased emphasis on accountable care, physicians are becoming liable not just for the quality of services they provide, but also those delivered by their referral partners. As a result, physicians – especially those participating in value-based contracts – now want to know which potential referral partners have demonstrated the best patient outcomes.

Transparency between payers and providers

The shift from a fee-for-service reimbursement system to value-based care – a delivery model in which healthcare providers are paid based on patient health outcomes – requires payers and providers to start working as allies rather than adversaries. Previously, both sides closely guarded their proprietary information to gain the upper hand during price negotiations. Transparency means providing access to previously withheld information and jointly tracking agreed-upon quality, efficiency, and patient satisfaction metrics.

Transparency within healthcare organizations

For hospitals and large medical practices, transparency relates to more accessible information about resource costs, patient outcomes and internal quality improvement initiatives. It also means improved communications and collaboration between all departments within the organization.

In hospitals, determining costs within a specific area, such as an operating room, can be challenging. Within individual practices, physicians often have difficulty seeing what other doctors are doing and how their own performance contributes to the overall process. In response, many hospitals and practices have begun investing in new technologies and team building efforts in order to improve efficiency and quality, reduce costs and improve patient outcomes and satisfaction.

Greater Transparency in Healthcare

The move to healthcare consumerism represents a major cultural shift. In the drive to lower costs while improving healthcare outcomes, all parties involved – providers, payers and consumers – must learn to think differently about how they deliver, consume and pay for healthcare services. In the end, everyone wants the same outcome – higher quality medical care at a lower cost. Healthcare consumerism with greater transparency could be the tool that gets us there.

DataPath, Inc. is a leading provider of cloud-based benefits administration solutions for FSAs, HSAs, HRAs, and COBRA accounts.

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