A couple of weeks ago, I came across a blog post from Physician’s Practice on pricing transparency. This short article had some high-level recommendations to help physicians prepare for a new era of pricing transparency, as a follow-on to CMS requirements for health systems to adopt such practices in 2021. Then it struck me: the fact that such an article is even needed points to the underlying challenges in primary care for payers and patients alike. The one sentence that really stood out to me was, “The policy goal of illuminating healthcare costs so patients may better assess if treatment options seems worthwhile.”
The article speaks of the potential of transparent pricing to help consumers, for instance, make informed decisions, or build deeper trust with their providers. I couldn’t agree more but it also highlights the closed club, the impenetrable Black Box of healthcare pricing, that has so bedevilled attempts to reform and modernize primary care (and healthcare in general).
Imagine buying a car and having no idea what the cost would be until the deal is closed. The entire purpose of pricing is to help all the individual actors make economic calculations in real time in the same language. Without appropriate price signals, there is no way to compare competitive makes and models, or even the price difference for the same vehicle at different dealers. You’d have no leverage to negotiate different levels of service or product quality beforehand. We wouldn’t stand for it and in industry after industry, spurred by technology, the closed shops have been opened up in the past generation, shifting power to the customer and end-user.
Healthcare is, as usual, the laggard here. It has always astonished me how accepting (resigned?) employers have been to the lack of clarity and accountability for their substantial healthcare spend, when they wouldn’t countenance such arrangements in any other part of their businesses. That is changing, however, as employers have, albeit slowly, realized the payer power they have over health delivery standards, both clinical and operational (and the recent Sutter case should help to blow this open). Crossover’s health activist employer clients are certainly at the forefront of this trend, and come to us for, among other reasons, our commitment to openness and transparency for our own costs, those that we refer to in the secondary care network, and the accountability for the cost saving impact generated by our care model. It is just unfathomable to us that we would consider it optional to display our prices clearly or probe into the ethics of doing so.
Just put a price out there man. Wow.
But this all goes back to what Clayton Christensen and Jason Hwang (who presented at our client Bombaro in August 2019) wrote in The Innovator’s Prescription about the evolution of healthcare from a largely empirical “art” to a precision “science.” A broad brush, but the roots of health delivery are in acute care – patients would present, and wise professionals would diagnose using experience and wisdom – “empirical medicine.” This open-ended, imprecise and responsive approach to care led to business models that mirrored the process, and even as diagnoses, procedures and care management have largely evolved via data to be far more predictable and evidence-based, the business models and the closed culture of healthcare are still lagging. What procedures will be used, what outcomes can be expected and what the costs are, remain unfortunately shrouded in secrecy and protected as intellectual property
As a result, we have these intermittent, external dictates to be transparent, and internal debates about how appropriate this all is. And what pointless debates these are. Of course, there are instances where the diagnoses and treatment paths are unknowns, and the diagnostic pathway is highly uncertain, but certainly in our own Primary Health services much of what we do can be priced predictably. We can accurately provide our own costs, price fairly and openly on a population level for our employer customers (and for our Members), and develop sound financial forecasts both for our business and their healthcare investment. In fact, this approach is the very foundation of our Commercial Advantage model for Primary Health. It’s the leverage employers need to provide the best care for their employees while taking control of the costs currently hidden away in the Black Box.
And it’s transparently clear that it’s the way to illuminate the path forward.