Let’s Talk Numbers: Americans Want Price Transparency And Cost Conversations
May 17, 2017
Despite recent efforts to make prices more transparent, a gap remains between the information people need and what’s available.
Originally published on health.oliverwyman.com (May 17, 2017)
When looking for a new apartment recently, I narrowed my choices to those that were in my current neighborhood and had a lot of windows. But when it came down to deciding where I should make a move, what really mattered most was cost—and specifically, finding the best apartment at the greatest value.
In making these sorts of significant decisions, it’s hard to think of a situation in which I would settle for anything outside of a good deal. (Why would I pay more for a worse apartment?) Yet the reality is I do it all the time when it comes to my healthcare. Like many people, I go to the doctor not having any idea how much it might cost, and then am surprised by how much I am charged. It turns out I am not alone: 77 percent of Americans have been surprised by how much a doctor, hospital or medical facility charged them.
What do consumers think about cost?
In a time when Americans are taking on more of their healthcare costs, there has been an increased effort from insurers, state governments, employers, and others to make price information more transparent and publicly available. The thought is that when healthcare has a clearer “price tag”, people will be encouraged to compare two or more providers’ prices and consider price in their healthcare decision-making, with the ultimate outcome that people choose less expensive care. However, before we can make this assumption, there are some questions that must be answered: Are people willing to look for price information? Will people actively choose less expensive care? Will looking for information help people save money?
My team and I at Public Agenda recently released research findings that addressed these specific questions and offer insight into how people think about their healthcare costs. There is good news. We found that 70 percent of Americans do not think higher prices are a sign of better quality medical care. And among Americans who, prior to receiving care, tried to compare multiple providers’ prices to find out how much they would have to pay out of pocket, 53 percent said that they ultimately saved money. Additionally, 40 percent of Americans who have never tried to find price information say they would be inclined to choose less expensive doctors if they knew the prices in advance.
Encouraging people to be more active in shopping around for healthcare prices may be a piece in helping to reduce the burden of healthcare costs. However, it is not as simple as just telling people to go find price information. This key caveat is clear in our finding that 63 percent of Americans say there is not enough information about how much medical services cost.
Where do consumers turn for cost information?
Our research found that of the Americans who tried to find price information, 55 percent turned to a friend, relative or colleague; just 46 percent turned to their doctor. What I find interesting is that friends and family are the preferred source for price information, but a majority of people – 77 percent – say they trust or would trust their doctors as a source of information about the price of medical care. Just 58 percent say they trust their friends, relatives, and co-workers.
People want more than basic cost information from their doctors; they want to have a conversation with doctors and their staffs about prices. Seventy percent of Americans think it’s a good idea for physicians to talk about prices before referring patients to specialists, or ordering or performing tests or procedures.
Unfortunately, we found that only 28 percent of Americans say a doctor or their staff has brought up the price of a test, procedure, or referral to a specialist before doing or ordering it. And as one woman in a New Hampshire focus group pointed out, the doctors may not be prepared to have these conversations. When we asked her about talking with doctors about prices, she said “the doctors have no idea.”
Starting the cost conversation
Despite recent efforts to make prices more transparent, a gap remains between the information people need and what’s available. One way to shrink this gap is to equip doctors and their staffs with the tools and skills needed to discuss prices with patients, or at least refer patients to reliable sources of price information.
While it may seem like a lot to ask of providers who are already short on time, an easy first step is to start discussing costs and coverage generally, and then guide patients toward more specific price information sources. It might even spark new thinking on care options. Engaging conversations around prices may just be one of the simplest keys to unlocking a good deal in healthcare.
Senior Research Associate
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