Chethan Sarabu, MD
Oct 11, 2024
In most markets, knowing the price of a product or service is a given before you make a purchase. You wouldn’t buy a car or book a hotel room without knowing what it costs first. Yet, when it comes to healthcare, the situation is often the opposite. Many people are left in the dark about the cost of care until after they receive treatment, and by then, it’s too late. The truth is, healthcare pricing can be surprisingly opaque, leaving patients feeling confused and overwhelmed when the bill arrives.
Why Don’t We Know the Costs Before Receiving Care?
One of the biggest challenges in healthcare is the lack of price transparency. It’s difficult to know how much a doctor’s visit, procedure, or medical test will cost ahead of time:
Unpredictable costs: Prices can vary significantly depending on where you go for care. The same procedure might cost hundreds of dollars more at one hospital compared to another across town.
Insurance differences: Your insurance plan plays a major role in determining what you’ll actually pay. Two people with the same treatment might receive drastically different bills based on their insurance coverage, in-network or out-of-network care, and deductibles.
These factors make it challenging, but not impossible, to estimate the cost of care before receiving it. For many patients, this uncertainty adds even more burden to an already stressful situation.
The Push for Price Transparency
To help bring some clarity to healthcare costs, the U.S. government has passed a series of laws aimed at making healthcare pricing more transparent. One of the most notable efforts is the Hospital Price Transparency Rule which went into effect in January 2021. Under this rule, hospitals are required to publicly post the prices for services in two ways:
Machine-readable files: These are large datasets that can be used by third-party applications and services to analyze and compare prices.
Consumer-friendly formats: Hospitals must also post a list of their most common services in a way that’s easier for patients to understand.
If hospitals or insurance companies fail to comply with these rules, they can face penalties. For example, hospitals may be fined if they don’t post their prices online or if the information is not easily accessible.
Price Transparency Alone Doesn’t Solve Everything
While having access to pricing information is a step in the right direction, it doesn’t automatically solve all the issues patients face when managing healthcare costs:
Personalized care: You might have a specific doctor, specialist, or hospital that you prefer or need based on your medical condition. In many cases, you can’t simply switch to the cheapest provider without compromising the quality or continuity of your care.
Limited alternatives: Even if you know that one provider charges more than another, it may not be practical or possible to change providers due to geographical location, insurance restrictions, or other factors.
That said, price transparency can still be extremely valuable on a larger, system-wide level. By shedding light on the actual costs of care, transparency can help the healthcare system function more efficiently and regulate prices over time.
Tools to Help You Navigate Price Transparency
Fortunately, several companies are emerging to make healthcare price data more accessible and easier to understand for patients. These companies are working to bridge the gap between the complex machine-readable files and the information patients really need. Two of the notable players in this space are:
Turquoise Health: This company focuses on making hospital pricing data more accessible and usable. They’ve created tools that allow patients to search and compare prices for various services across hospitals.
Serif Health: This company helps patients navigate the complex world of healthcare pricing by providing insights into the costs of care and helping them make informed decisions.
These companies and others like them are paving the way for a more transparent healthcare experience, giving patients tools to take greater control over their medical expenses.
The Future of Healthcare Price Transparency
Healthcare price transparency is a critical step toward empowering patients and improving the overall healthcare system. While there are still challenges to fully realizing its potential, having access to clear and reliable pricing information is a game-changer. As new solutions are developed that make price data easier to use, patients will be better equipped to manage their healthcare costs and make more informed decisions about their care. Our goal with OpenHand is to continue to help patients make the most of all this information to have fair prices.