5 Long-Term Consequences of the Hospital Price Transparency Rule

Historically, healthcare prices in the United States have always been opaque and difficult to understand and justify. Often, patients made healthcare purchases without fully knowing what was being sold. When the bill arrived, usually weeks later, it was filled with cryptic information about procedure codes, diagnosis, various unfamiliar items, and confusing calculations detailing the deductibles, co-payments, and the total charges.

Since patients couldn’t know what they would owe until the bill arrived, many put off getting preventive care and screenings just to avoid footing huge medical expenses, leading to the hospital price transparency rule.

According to the Centers for Medicare and Medicaid services, hospitals are required to publicly disclose the maximum and minimum charges for all items and services they offer. The theory is that cost transparency will enable customers to compare hospital services and shop according to their budget.

While the rule has the superficial appeal of lowering healthcare costs, it has several disparate, complex, and unintended consequences throughout the healthcare industry.

Here are 5 long-term repercussions to expect from the implementation of the hospital price transparency rule.

1. Some hospital prices will become more competitive

To avoid losing patients to other institutions, some hospitals, particularly those in the private sector, will streamline some of their costs for discretionary services. These could include laboratory services, imaging services, such as MRIs and X-rays, as well as medical and surgical procedures. They may also lower the cost of outpatient care. To balance this, some will have to downsize or outsource certain services to cheaper professionals, which could jeopardize the quality of care.

2. Some hospitals will increase prices for more vital services.

This will be done to bridge the revenue gap caused by the low prices for discretionary services. In this regard, prices are more likely to soar for emergency services, such as trauma care, hospitalization, and surgeries, among others.

3. Some hospitals will not survive.

Because of the highly competitive environment, some stand-alone hospitals in rural areas will struggle to attract physicians and negotiate sufficient payment terms with them. Since hospitals will have lost their negotiating leverage due to the transparency rule, fewer physicians will be willing to work for average incomes in remote areas, since they know the institutions that offer much higher wages. Failure to attract and maintain physicians will cause some facilities to cease operations.

4. Hospitals will be slow to adopt new technology.

Decision-makers in the health care industry will become more risk-averse due to the price transparency dynamic and only adopt new technology if it has a strong value proposition. Lifesaving technology will be vetted primarily based on whether it can reduce the hospital’s costs or generate revenue to enable the hospital to survive and remain competitive.

5. Some hospitals may effect higher prices overall

Price transparency will lay bare the disparity of payments across the healthcare industry. Some facilities will discover they receive the lowest Medicaid contributions and public subsidies and make a case that they require significant increases. Similarly, others may discover they don’t command the highest rates and adjust their prices to be the most exorbitant in specific service categories to cater to the most elite customers; an ironic twist considering the reform was meant to lower the cost of healthcare.

Check out related articles surrounding What North Carolina’s Medicaid Transformation Means for the Healthcare Community and The Pandemic Could Lead to More Uncollected Medical Debt .

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