It’s time for hospitals to make pricing transparent – Pacific Research Institute

It’s time for hospitals to make pricing transparent

Many hospitals are refusing to comply with a Trump-era requirement that went into effect on Jan. 1 to publish the prices for more than 300 “shoppable” medical procedures.

This intransigence is alarming – and expensive. The rule could save American patients and insurers up to $27 billion annually, but only if hospitals play ball.

Rates of noncompliance are extraordinarily high. Three-quarters of the highest-earning hospitals in the country aren’t fully compliant with the rule, according to a study out last month from researchers at Harvard Medical School. A March analysis published in Health Affairs found that two-thirds of hospitals weren’t complying.

When hospitals don’t publish their prices, patients have no way of knowing if they’re getting a good deal on elective surgeries and other procedures – or getting ripped off.

Prices for identical services vary widely, depending on the location and provider. A simple cholesterol test in Oakland, Calif., costs an average of $30 – three times as much as it does in Orlando, Fla. Women undergoing C-sections in San Francisco pay nearly $21,000 – more than quadruple the $4,556 that women in Knoxville, Tenn., pay.

Even in the same city, there are major price discrepancies. The most expensive 5% of hospitals in metro areas containing more than 3 million people receive almost $1,400 for each knee MRI, on average. The least expensive 5% of hospitals in those metro areas take in just $600 for the scan, according to Crowe, a consulting firm.

If a gas station or grocery store tried to slap a 133% premium on an identical product, they wouldn’t get much business. Customers shopping for gas or food can easily compare prices and find a more competitive option.

That’s why hospitals are so loathe to comply with the rule – the lack of transparency makes it much easier to gouge patients and insurers.

Hospital groups have already lost two court challenges against the rule. Their attorneys claimed that patients would be unable to decipher byzantine pricing schedules and could not be trusted to make responsible financial and health decisions. They complained that publishing their prices would be an expensive regulatory burden. And they protested that the pandemic had handicapped their capacity to comply.

Those arguments don’t pass muster. Consumers make weighty financial and health decisions all the time. Transparent prices make that task easier, not harder.

The fight to make health care more affordable and accessible begins with price transparency. It’s long past time for hospitals to publish their prices – so that market competition can drive down costs and improve quality.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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