How Healthcare Transparency Could Reduce Costs and Improve Outcomes

The ongoing trend in modern American healthcare centers around one word—transparency. Healthcare transparency is widely seen as a step towards improving healthcare outcomes and lower costs. For employers who provide healthcare coverage to employees, especially self-insured employers, there is predictably a huge amount of interest in this strategy.

Employers are making efforts to improve healthcare transparency for employees with the goal of reducing costs and improving the member experience. Here we explore all of these factors in the ongoing movement toward greater transparency in the healthcare field.

What is Healthcare Transparency?

The Institute of Medicine’s definition of healthcare transparency is likely one of the most comprehensive: making information publicly available about a provider’s or healthcare system’s quality, efficiency, and consumer experience, including pricing. The purpose of this approach is to achieve better outcomes with regard to healthcare quality and cost of care. 

The transparency issue is now front and center, largely due to recent price transparency rules issued by the federal government. Now hospitals must publish information on both their standard charges and rates negotiated with third-party payers. Beginning in 2022, private health plans will need to publish similar information. In short, healthcare transparency appears to be here to stay, and employers are eagerly embracing it as a potential route to more efficient benefits plans.

Benefits of Healthcare Transparency

While the goals of healthcare transparency are to increase healthcare quality and lower costs, the question remains: How exactly will it accomplish those goals? According to research and expectations, transparency will improve the healthcare industry in the following specific ways:

• Cost Alignment: There are currently huge variations in healthcare prices for the same or similar procedures between different geographic areas, providers, and health networks. Transparency advocates argue that public awareness of how much services cost will result in increased price competition, along with those differing prices coming into alignment.‍
• More Informed Patients: Patients will be able to make informed choices when choosing health plans, providers, or treatments. The idea is that patients will be able to find their procedure in an easy-to-understand tool or website, find out how much it will cost, and choose a provider that works for their budget.‍
• Higher Quality Doctors and Treatments: Transparency will incentivize doctors to maximize the quality of their care in order to attract and keep patients. And there will be increased trust in the physician-patient relationship, which will also serve to increase quality of care.
  

Even healthcare payers who haven’t embraced price transparency can agree that the current cost trends are unsustainable. With rising deductibles and annual premium increases of up to 30%, employers simply cannot afford to ignore the potential upside of transparency. Many of them are embracing this strategy and helping employees seek more efficient care.

Self-Insured Employers’ Efforts to Improve Healthcare Price Transparency

The following are two of the more common ways in which companies are making efforts to improve healthcare transparency for their employees.

Price Comparison Tools

Healthcare is a unique industry in the sense that consumers rarely know prices before they receive a service. This is further complicated by the fact that patients understandably choose medical treatments based on need, not price. After all, wouldn’t you choose the doctor who is available to set your broken arm today instead of one who may be 20% less expensive but can’t see you for a week? Patients seeking care are sick or injured, and they go where they can get help fast. For employers, this creates the potential for healthcare costs to spiral out of control.

Fortunately, many tools are now available for patients to view healthcare prices before they need a service, especially something like a knee replacement or other planned surgery. Employees say they are likely to use these tools, too.  According to a 2019 healthcare survey by Deloitte, 49% of American consumers would likely use a tool allowing for direct price comparisons between providers. The survey also found that the numbers of consumers actually using these tools were also increasing, nearly doubling from 14% to 27% over a three-year period.

Employers can take advantage of this increased demand for price comparison tools and provide them directly to employees.

Member Education Efforts

One of the best steps an employer can take is educating its employees on the nature of their health benefits. A 2019 survey by HSA Bank found that 1 in 5 consumers cannot identify the type of health plan they have. This means they likely have no insights into their in-network providers or coverage levels. In fact, 30% of consumers do not know how much they pay for premiums, deductibles, or other out-of-pocket costs.

HR and benefits leaders  can help with this much-needed education. Employers can also offer a wide variety of health plans and coverage options for employees, giving them choices and explaining the differences for different levels of need. Proactive benefits teams often take the time to educate employees during Open Enrollment, offering extensive benefits plan guides and plan comparison tools for employees and their families. 

Open Questions About HealthcareTransparency

One open question on transparency is its practical effect on patient choices. Are patients prepared to jump through the hoops of doing research before seeking care? And how much does price factor into their healthcare decisions?

Employers can take the lead on this issue by educating employees on how and when to utilize price transparency tools. For example, patients planning ahead for voluntary procedures like annual screenings or a knee replacement are much more likely to shop around. Benefits teams may even find value in sharing the value of their company’s healthcare benefits and explaining the main drivers of costs. This could help establish a clear connection between the employees’ health care choices and out-of-pocket costs, such as premiums, deductibles, and co-pays.

Of all the players in the healthcare industry, employers have some of the greatest interests in improving outcomes and containing costs. The health and well-being of their employees are at stake, along with the company’s bottom line. With sound strategies, companies can ride the healthcare transparency trend to better benefits for employees.

Data on employee population health can help self-insured employers get the most advantages out of the healthcare transparency trend. Watch our 2-minute demo video to learn more.