How to Grow Market Share with Price Transparency - Advisory · How to Grow Market Share with Price...

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How to Grow Market Share with Price Transparency Competing for Patients in a Cost-Conscious Market

Marketing and Planning Leadership Council

©2014 The Advisory Board Company • 29965 advisory.com 2

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Project Director

Contributing Consultant

Marketing and Planning Leadership Council

Design Consultant

Practice Manager

Madhavi Kasinadhuni

Caity Stuhan Emilia Thurber

Christina Lin

Alicia Daugherty


Table of Contents

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Cost-Conscious Market Demanding Transparency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9 Generating Accurate Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 Educating Patients on Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Building Awareness of Transparency Efforts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31


The Marketing and Planning Leadership Council has developed numerous resources to help marketing and planning leaders recruit and retain patients in a price-sensitive market. All of these resources are available in unlimited quantities through your Marketing and Planning Leadership Council membership.

To Order via Advisory.com To order copies of these and other Marketing and Planning Leadership Council presentations, please

search for them on our website at advisory.com

Available Within Your Marketing and Planning Leadership Council Membership

Attracting the Price-Sensitive Consumer

Webconference detailing how different organizations are creating tailored pricing strategies to attract and retain price-sensitive patients.

What Do Consumers Want from Primary Care?

Brief analyzing 2014 Primary Care Consumer Choice Survey that asked 4,000 consumers what they’re looking for when choosing a clinic. Describes top clinic attributes, patients’ relative preferences, and cohort differences.

Representative Resources for Consumer Oriented Competition

Driving Adoption of Virtual Visits

White paper explaining how to design and invest in a virtual visit service model that maximizes ROI.

Meet Your New Medicare Patient

Brief describing how Baby Boomers differ from previous generations and how to engage them.

Future Growth Channels

Brief outlining the four emerging decision makers who are increasingly exerting influence on patient traffic, and how provider organizations can reach them.

Finding New Value in CRM

Publication demonstrating how to optimize your customer relationship management strategy to reach care management goals and increase patient share.


$1.18M $150K $61K $1.39M

Increased POSCollections

Bad DebtReduction

LaborReduction Cost

Total Return

In addition to the resources available through the Marketing and Planning Leadership Council membership, The Advisory Board Company offers Payment Navigation Compass.

Payment Navigation Compass automates the patient financial clearance process to help increase point of service collections, improve patient satisfaction through enhanced price transparency, and decrease eligibility and authorization denials.

Beyond the Marketing and Planning Leadership Council: Payment Navigation Compass

Contact Us

For more information on how you can improve your front end processes and performance at your hospital or health system, please visit our website: advisory.com/technology/payment-navigation-compass

Or email us at [email protected]

Case Study: Using Advanced Analytics to Drive a $1.3M+ Return • 305 bed hospital in the Midwest • Results reflect November ’13 – October ‘14

In the last 12 months of utilization, Hospital has increased collections by $1M+ and reduced Radiology bad debt $150K

Payment Navigation Compass provides the technology, expertise, and staff to help automate the patient estimation, eligibility verification, and authorization retrieval process. Grounded in best-practice research, our technology solution offers an automated approach to quickly identify patient out of pocket cost while verifying eligibility and authorization status.

• Estimate the patient financial obligation prior to receiving service by combining data from the provider’s chargemaster, payer contract terms, and patient’s insurance benefits

• Automate the process of verifying eligibility, authorization retrieval, and Medical Necessity checks on both commercial government payers

• Reduce bad debt by accelerating patient cash on the front end

• Improve patient satisfaction with best practice price transparency tactics

Hospitals are leveraging our advanced Patient Access solution to:

Increasing Point of Service Collections Through an Automated Approach


Advisors to Our Work

With Sincere Appreciation The Marketing and Planning Leadership Council is grateful to the individuals and organizations that shared their insights, analysis, and time with us. We would especially like to recognize the following individuals for being particularly generous with their time and expertise.

Baptist Health South Florida Coral Gables, FL Lilly Macias Eric Shatanof Catalyst for Payment Reform San Francisco, CA Nicole Kohleriter-Perelman CHI Conifer Health Lincoln, NE Jean Dowling George Wagaman Wade Wiles Doylestown Hospital Doylestown, PA William DiGiorgio Emory Health System Atlanta, GA Andy Rowles Jessica Tribbett

Miami Children’s Hospital Miami, FL Mark Llorente New Choice Health Pensacola, FL Brian Keigly Priority Health Grand Rapids, MI Mary Anne Jones Molly McCarthy Christina Thueme Shields Healthcare Quincy, MA Lisa Campisi Lauren Quimby Spectrum Health Grand Rapids, MI Christina Freese-Decker Mark Taylor

Sutter Health Sacramento, CA Jaime Mathews Jeff Soto Valley Presbyterian Hospital Van Nuys, CA Victoria Muller Wentworth Douglass Hospital Dover, NH Robert Gilbert Jeffery Hughes


Executive Summary

Provider organizations face mounting pressures from price-sensitive patients and policy makers to share price information prior to delivering services. Yet posting prices could lead to price wars, and customized estimates require significant resources to generate. Many hospitals and health systems are understandably reluctant to invest in transparency tools beyond those required by law. Providers that only post charges in response to state mandates risk market share loss as consumers with increasing financial incentive to shop for care begin to make provider choices based on price alone.

However, organizations that adopt a thoughtful, proactive approach to price transparency can use these efforts to grow market share by building their reputations as patient-centered, protecting patient loyalty, and attracting price-sensitive patients. To use transparency efforts for market share growth organizations must:

Generate Accurate Estimates

Since health care services vary widely in complexity and cost, providing full transparency for every patient and service requires many specific data inputs housed in silos across the organization. To use limited resources effectively, providers prioritize efforts by service and patient group, and centralize the infrastructure for developing price estimates in order to ensure consistency and accuracy.

Educate Patients on Price

The market share impact of providing price information is constrained by patients’ ability to understand and make informed decisions based on the estimates provided. Hospitals and health systems must educate patients by simplifying complex price information and distilling benefits information.

Build Awareness of Transparency Efforts

Although market research indicates patients want price information, utilization of transparency tools among insured patients remains low. To use these tools to attract patients beyond the highly price-sensitive, providers must increase awareness of price differences and actively drive utilization of transparency services.

This publication offers case profiles and analysis of how progressive organizations are deploying transparency investments to grow market share.



Insurers and Employers Steering Beneficiaries

• Employers investing in price comparison tools and offering incentives if patients choose low-cost alternatives

• Reference pricing shifts cost to beneficiary, driving them to choose low-cost sites

The burden of growing health care costs is driving demand for hospitals and health systems to provide transparent price information.

Shifts in coverage are motivating patients to shop for lower prices, either through direct steerage programs where payers offer financial incentives for choosing lower-cost providers or through high-deductible health plans that shift the cost burden to beneficiaries. Since 2009, average deductibles for both in- and out-of-network services have more than doubled—an increase more acutely felt for consumers shopping on private or public exchanges.

In response to this trend, policy-makers are more aggressively pursuing legislation to increase transparency on the direct-to-consumer costs to help individuals make informed health care choices. A majority of states have some baseline requirement that mandates hospitals to make charges available to patients on request. More progressive states require hospitals and other providers to post self-pay prices or average patient responsibility. Finally, a handful of states are moving toward an all-payer claims database that can inform a state-run transparency website to help constituents shop for care.

Cost Conscious Market Demanding Transparency

Three Trends Pushing Providers to Offer Price Estimates

Source: “Report Card on State Price Transparency Laws,’ Catalyst for Payment Reform, March 25, 2014; “Castlight Health Now Looks to Raise About $111M with IPO,” Mobihealth News, March 3, 2014; “January 2014 Census Shows 17.4 Million Enrollees in Health Savings Accounts,” AHIP Center for Policy and Research, July 2014; Marketing and Planning Leadership Council interviews and analysis. 1) High deductible health plans.

Rising Number of Consumers on HDHPs1

• Employers continue to shift cost to consumers by increasing patient responsibility for payment

• Public exchange participants had deductibles ranging from $1,150 to $7,500 in 2014

Policy Makers Passing Transparency Legislation

• 39 states have some transparency requirement

• Most require hospitals to provide charge information

• Few states moving to all-payer, statewide claims database to build transparency site

States required by law to make charges available

34 2013 revenue of Castlight

Health, a health technology firm focused on price

transparency

$13M Yearly average growth in

HDHP enrollment since 2011

15%


High profile news article changes public perception of health system reputation, consumers look for alternative provider

Provider with Patient-Centered Reputation

Patients deterred from current hospital provider by employer incentives to choose from preferred low-cost providers

Payer-Preferred Providers

Patients on HDHP compare procedure costs using state-wide database of hospital charges and schedule with new surgery center

Providers that only post charges in response to state mandates risk market share loss as consumers with more financial incentive to shop for care begin to make provider choices based on price alone.

Since most consumers do not understand the difference between charges and actual out-of-pocket responsibility, many will be open and willing to seek lower-cost alternatives. For example, traditionally loyal patients will be more likely to follow steerage tactics from payers if hospital charges appear significantly higher than the insurer’s preferred providers. Likewise, consumers with high deductibles will rely on publically available cost information to drive decisions.

Provider reputation will also be vulnerable to potential inflammatory media criticism on high and variable costs—shifting consumer perceptions of an organization’s brand and value.

Exposed Charges Leave Provider Share Vulnerable

Consumers Reacting to High List Prices Redirected to Competitors

Source: “Everett Clinic Proudly Posting Prices Publicly,” My Everett News.com, http://myeverettnews.com/2014/10/30/everett-clinic-proudly-posting-prices-publicly/; “Oklahoma City hospital posts surgery prices online; creates bidding war,” KFOR, http://kfor.com/2013/07/08/okc-hospital-posting-surgery-prices-online/; Marketing and Planning Leadership Council interviews and analysis.

Transparency Places Market Share at Risk

Competitor with Lowest List Price


In order to meet the market demand for price transparency and defend market share, providers must overcome several challenges to providing meaningful price information.

First, most price information available today, either from providers directly or third-parties, does not reflect an individual’s actual out-of-pocket responsibility. Providers struggle to generate accurate estimates because each price requires bringing together many disparate pieces of plan-specific and patient-specific information.

Second, most consumers do not understand price information. According to the Department of Health and Human Services, 90% of Americans have poor health literacy—meaning many cannot find and process basic healthcare information such as insurance benefits and out-of-pocket obligations.

Finally, consumers are not seeking out price information. The Catalyst for Payment Reform found that 98% of insurers provide some price information, but only 2% of beneficiaries access it.

Facing an Uphill Battle to Provide Price Information

Unstructured Transparency Efforts Turn Off Potential Patients

Source: Hsia, et al. “Health Care as a ‘Market Good’? Appendicitis as a Case Study.” Arch Intern Med. 2012; 172(10):818-819, http://archinte.jamanetwork.com/article.aspx?articleid=1151669; Health.gov, “America’s Health Literacy: Why We Need Accessibly Health Information,” http://www.health.gov/communication/literacy/issuebrief/; Catalyst for Payment Reform, National Scorecard on Payment Reform 2013, http://www.catalyzepaymentreform.org/images/documents/NationalScorecard.pdf; Marketing and Planning Leadership Council interviews and analysis.

Challenges Raised by Unstructured Transparency Efforts

Americans who do not have a proficient level of health

literacy: the capacity to obtain, process, and understand basic

health information

90% Beneficiaries who use available pricing tools

through the health plan

2% Differences in hospital

charges not based on patient or hospital factors

32%

Provider Price Estimates are Inaccurate

Patients Don’t Understand Price Information

Consumers Don’t Access Price Information

• Prices vary significantly depending on a number of patient-specific inputs

• Estimates often do not reflect actual amount paid on patient bill

• Patients don’t know what contributes to provider prices

• Patients don’t understand complex insurance terms

• Patients don’t know when to seek price information

• Patients don’t know that price estimate tools are available

advisory.com 12 ©2014 The Advisory Board Company • 29965


To protect and grow market share through price transparency efforts, providers must offer consumers accurate prices, educate them about how to compare estimates and read bills, and promote transparency efforts.

Three Mandates to Grow Market Share with Price Transparency

Ability to Compete for Patients Requires Systematic Approach

Strategies for Structuring Price Transparency Efforts

Generating Accurate Estimates

1. Map Estimate Approach to Patient Population

2. Centralize Infrastructure for Estimate Generation

I

Educating Patients on Price

3. Simplify Price Information

4. Train Staff to Explain Price Information

II

Building Awareness of Transparency Efforts

5. Promote Transparency Tools Across Multiple Channels

6. Solicit Patient Feedback

III



1. Map Estimate Approach to Patient Population

2. Centralize Infrastructure for Estimate Generation

Generating Accurate Estimates


Provider organizations struggle to offer better out-of-pocket price estimates for two reasons.

First, the price for any given procedure can vary significantly within the same organization based on a number of inputs including cost and negotiated contract rate for each payer. Moreover, because treatment plans differ based on unique patient needs and physician preferences (for procedure types, equipment, etc.), the price is difficult to predict without several patient-specific details.

Second, patients who seek estimates do not have access to all necessary information that hospital staff need to provide an accurate estimate, such as benefit details or CPT codes. Most patient-facing staff also have difficulty helping patients obtain this information because the data for each input lives in different departments within the provider organization. For example, the managed care office has access to contract rates, the registration desk has access to scheduled treatments, while the billing department has access to discount eligibility.

To generate accurate estimates, providers must tailor the information shared to patient needs and centralize the infrastructure for providing price estimates.

Complex Price Inputs for Individual Patients Fuels Inaccurate Estimates

Disparate Data and Limited Knowledge Complicate Process

Source: Kaiser Health News, “Mass. Patients Can ‘Shop’ for Health Care– At Least in Theory,” February 26, 2014, http://kaiserhealthnews.org/news/massachusetts-price-transparency-part-of-law/; Marketing and Planning Leadership Council interviews and analysis.

Patient told to call billing office for more specific estimate, front

desk doesn’t have access to info

Billing office requires the CPT

code for the procedure to give quote, but patient doesn’t know it

For quote, patient must provide CPT

code, annual deductible,

coinsurance and copay amounts

Patient calls hospital for price

quote for procedure, is given

a range of $10,000-$30,000

Kaiser Health News Profiles Inaccurate Patient Estimates

Many Patient Inputs Required Inputs Difficult to Access


Since health care services vary widely in complexity and cost, providing full transparency for every service for every patient is challenging. Although many states require providers to post charges for their most frequently billed services, these services are not necessarily those consumers will shop for based on price. To use transparency efforts to grow market share, providers should prioritize services that cost-conscious consumers are most likely to shop for.

Healthcare Bluebook, an online price comparison tool provider, builds this list by first evaluating all services that fall within a typical deductible (any service less than $6,000) for a HDHP. Then, analysts use six additional ‘shoppability’ criteria to narrow the list of services they post on their platform. Services included in the final list vary in price from provider to provider, but typically have limited variability in quality, allowing patients to make appropriate comparisons across providers. They are also elective or non-emergent (often outpatient) and can be scheduled by patients themselves, so patients can make a decision without a physician’s influence. Finally, Healthcare Bluebook focuses on high volume procedures to maximize the number of shoppers they serve.

Prioritize Shoppable Services to Target Cost-Conscious Consumers

Healthcare Bluebook Narrows Price List to Frequent, Elective Procedures

Source: Healthcare Bluebook, www.healthcarebluebook.com,; Marketing and Planning Leadership Council interviews and analysis.

1) Pseudonym 2) Sample– will vary by market

Description 2013 Avg. Charge

Endoscopy Polypectomy $3,270

Sleep Study $1,227

Atrial Cardioversion $1,177

Echo Cardiogram $1,839

Knee MRI, no contrast $770

Laparoscopic Appendectomy $12,575

Pomfrey’s1 Top Outpatient Procedures Criteria for “Shoppability2”

Case in Brief: Healthcare Bluebook • Online price comparison tool for individuals and employers

• Posts “Fair Price” for shoppable services, such as mammographies, colonoscopies, and MRIs, and rates providers as green, yellow, or red depending on how their price compares to Fair Price

• Employers save 4-12% of total medical costs; employees save approx. $1,500 per event

Outpatient High volume

High variance in price

Elective/not emergent

Can be scheduled

Low variance in quality

1: Map Estimate Approach to Patient Population


After promoting shoppable services for transparency efforts, providers must determine how best to share price information with various patient groups.

Everett Clinic in Washington state posts self-pay price ranges for a variety of services including well visits, oncology services, and lab services. To help potential patients navigate the price information, services are categorized by common service lines and include billing codes so shoppers can readily identify services recommended by a physician and make price comparisons across providers. In addition, Everett strategically highlights available discounts alongside list prices to attract patients to the clinic and improve upfront collections.

To ensure patients understand that their costs may vary based on services received, the site clearly caveats that prices are for the procedure only, and do not reflect any additional services that might be provided during the actual visit.

For Self-Pay Patients, Post Prices for Common Procedures Online

Source: The Everett Clinic: http://www.everettclinic.com/health-care-pricing/private-pay-fees.ashx?p=6255 Marketing and Planning Leadership Council interviews and analysis.

Case in Brief: Everett Clinic

Features of Everett Clinic’s Price Listings

• Physician practice in Washington state providing care for 300,000 patients

• Began listing some prices in May 2010, expanded listings to the most-used services

• Self-pay and uninsured rates posted online; insured patients can call for customized assessment

Caveat notifies patients of estimate limitations

Discounts attract price-sensitive patients

Price ranges alert patients to variation

Billing codes facilitate shopping

1 2 3 4

Sample Services with List Prices

Preventive and Wellness: Annual wellness exams, colonoscopies, immunizations

On Demand/Primary Care: Physician visits, wart removal, burn dressings

Specialty Service: Chemotherapy, podiatry, physical therapy

Chronic Disease: Dialysis, mobile telemetry, thyroid scans


Insured patients require more sophisticated pricing information since prices vary based on negotiated contract rates and an individual’s benefit plan. Providers can reach insured patients by providing an online cost estimation tool.

Baptist Memorial’s online tool guides patients through a multi-step process that facilitates estimate accuracy and shopping. First, patients choose from a list of available procedures or search by keyword if they do not know the name of the relevant procedure. Next, patients are directed to provide detailed insurance information, including their deductible. The tool then lists the average charge for that procedure for a patient with the specified type of insurance. The results page displays the charge alongside the patient’s other benefit information. This page also links to definitions of the terms used to generate the estimate.

Payers typically take estimation tools one step further by offering side-by-side comparisons of local providers and allowing patients to directly book appointments online. Providers should consider ways to incorporate these elements into their price estimation tools.

For Insured Patients, Provide Automated Online Estimates

Baptist Memorial Tool Provides Quotes Based on Individual Patient Information

Source: Baptist Memorial Healthcare Expense Navigator, http://bolapps.bmhcc.org/estimator/; Marketing and Planning Leadership Council interviews and analysis.

Search a Condition or Treatment • Patients can choose from a list of

available procedures

• Patients can search by name, code, or keyword like “backache”

• Provides instructions to fill out benefits information

• Allows for commercial insurers, Medicare, or no insurance

• Provides estimate cost alongside other insurance information

• Links to definitions of benefit information

Tailor Estimate by Insurance Status

Define Out-of-Pocket Responsibility


By posting prices and providing a cost estimator tool online, providers can meet a significant number of patient requests for price. More complicated services and treatment plans, however, require a customized approach to ensure estimate accuracy.

Gwinnett Medical Center set up a price estimation hotline to provide price estimates to patients with complex conditions like cancer. To ensure accuracy, Gwinnett contracted with an IT vendor to develop a platform that incorporates important care details into their price estimates. The software pulls relevant patient information directly from the electronic health record and combines it with up-to-date fee schedule information.

Call center-generated estimates are most effective when they ensure the accuracy of relevant codes by checking in regularly with physicians. In addition, call center staff can guide patients needing financial counseling to the appropriate resources while on the phone.

For Complex Cases, Direct Patients to Call Center

Financial Counselors Directly Available Through Call Center

Gwinnett Medical Center, Lawrenceville, GA; Oncology Roundtable interviews and analysis.

• Patient medical record number

• Patient benefits

• Treatment plan

Rates for all commercial and government payers updated quarterly

Fee Schedule

Protocol Analyzer

EMR

Patient benefit details

Total cost estimate

Treatment plan details

Case in Brief: Gwinnett Medical Center

• 553-bed not-for-profit health care network based in Lawrenceville, Georgia

• Contracted with IT vendor to automate out-of-pocket cost estimates for patients

• Software pulls patient information, including treatment plan, from EMR as well as up-to-date fee schedule rates to produce cost estimates for patients


For most organizations, offering custom estimates is a challenge because few staff have access to all the necessary information, leading to inaccurate estimates.

Provider organizations can improve the accuracy of price estimates by centralizing the process for developing and communicating price information.

Baptist Health South Florida accomplished this by creating a designated department, the Central Pricing Office (CPO), to manage all patient requests for price information.

The office consists of the VP of Managed Care and six dedicated pricing counselors who generate price estimates, communicate price information to patients, and track new pricing regulations to modify their approach as needed. Regardless of when patients request price information across many touch points with the provider organization—when they schedule an elective procedure, when they contact their insurance provider, or when they are viewing the website to “shop” before choosing a site of care—all estimates are funneled through the CPO to ensure consistency and accuracy.

2: Centralize Infrastructure for Estimate Generation

Designate Responsibility for Managing Price Information

All Estimate Requests Funnel Through Baptist Health’s Central Pricing Office

Source: Marketing and Planning Leadership Council interviews and analysis.

“With a telephone call or online submission to the CPO, patients can obtain the out-of-pocket estimate specific to their service, their insurer, and their benefit structure… The Central Pricing Office is the only entity with the authority to quote prices.”

Managed care, self-pay patients schedule an elective procedure

Insured patients request a quote

Prospects call to price shop or plan finances

Many Sources of Patient Requests All Requests Answered by Central Pricing Office

Single Patient’s Price Estimate

Corporate VP Baptist Health South Florida

Case in Brief: Baptist Health South Florida

• 7-hospital health system with over 30 outpatient centers, employed physician practices and a clinically integrated network in South Florida

• Struggled with discrepancies in self-pay price quotes among different sites of care

• Created a Central Pricing Office in 2001 for self-pay international and domestic patients, started offering estimates of patient out-of-pocket costs to all patients in 2005


The critical success factor for Baptist Health’s Central Pricing Office is the expertise of its dedicated pricing counselors—each has both a strong grasp of healthcare payment structure and the ability to communicate effectively with patients.

Dedicated pricing counselors have three responsibilities:

1) Analyze managed care contracts and update price estimate processes and tool

2) Generate price quotes with a home-grown estimator tool and historic treatment data; calculate patient responsibility for complex treatment plans

3) Communicate price information to patient-facing staff and patients

Dedicated Pricing Counselors Streamline Estimates Across Network

Role Requires Both Analytics and Communications Skills

Requirements

1

2

3

Analyze contracts

Calculate patient responsibility

Explain complex price information to patients


Responsibilities

Job Description for Dedicated Pricing Counselors

Master’s in Business Administration

Experience identifying and resolving customer issues

Interpersonal communications and customer service skills

Fluency in multiple languages

Ability to explain complex financial information in laymen’s terms

Calculate patient payment responsibility

Utilize analytics and decision support tools

Communicate price information to patient-facing staff

Draft communications directly to patients explaining estimates

Provide and explain price estimates to patients

Knowledge of managed care contract structure

Understanding of health insurance structure and elements

Evaluate managed care contracts and estimation process

Access database to analyze past quotes


Staff Training Required

Regardless of who manages the estimate process, all estimate providers should use a single pricing tool to generate estimates across the organization.

Single-site organizations that serve a smaller patient population and operate under fewer payer networks can offer manual out-of-pocket estimates. Although this approach requires the least upfront investment, staff must receive intensive education on managed care contracts and health care pricing, and have dedicated time to answer patient requests.

Midsize organizations with highly skilled staff can develop their own homegrown estimate tool based on common service offerings. While a homegrown tool requires more upfront staff effort, in the long run it can generate returns in the form of quicker and more accurate estimates.

Large or multi-regional systems with many, varied purchaser relationships can benefit from a third-party technology platform. This is the most expensive option but does reduce time to implementation and is fully automated. Moreover, vendors can provide expertise and guidance for managing and communicating price information to patients.

Systematic Pricing Tools Reduce Per-Estimate Effort

Three Methods to Develop Out-of-Pocket Estimates

Minimal Moderate High

Time Required to Create

Upfront Cost

Time to Produce Estimate

Automation


Best For:

Manual Out-of-Pocket Estimates

• Single-site organizations • Fewer managed care

contract, narrow network • Small patient population

Homegrown Out-of-Pocket Estimate Tool

• Midsize organizations • Centralized decision-making

structure • Highly skilled staff • Common service offerings

Automated Out-of-Pocket Estimate Tool

• Large (or multi-regional) system

• Many, varied purchaser relationships

• Highly specialized services

advisory.com 24 ©2014 The Advisory Board Company • 29965


3. Simplify Price Information

4. Train Staff to Explain Price Information

Educating Patients on Price


The market share impact of providing price information is constrained by patients’ inability to understand and make informed decisions based on the estimates provided. Hospitals and health systems can improve the efficacy of their price transparency efforts by educating patients on price information.

Education should focus on simplifying complex price information and distilling benefits information.

Patient Knowledge Gaps Limit Efficacy Of Transparency Efforts

Despite Transparency Efforts, Patients Struggle with Price Information

Source: “Providers Fall Short on Price Transparency,“ Fierce Healthcare, http://www.fiercehealthfinance.com/story/providers-fall-short-price-transparency/2014-06-23.

Patients Don’t Understand Price Information

Patients who were “sometimes or always” confused by medical bills

54%

Patients who were “sometimes or always” confused by their out-of-pocket costs

62%

LA Times Reporter Finds Patients Confused by Different Prices for the Same Procedure,

"I don't understand," he said. "With one knee, everything was covered. With the other, they want me to pay $15,000. What's different?"


Since patients experience an episode of care as one cohesive encounter, many are confused by separate bills for hospital, physician, and ancillary fees. One way to simplify price information and reduce the stress of complex purchase decisions is to bundle services by episode and offer one total price.

Pomerene Hospital in Ohio was losing self-pay patients to low-cost competitors. To recapture patients seeking low prices, Pomerene devised all-inclusive service bundles at a reduced rate. Pomerene found patients were willing not only to choose their hospital but also to pay for services up front when presented with simplified, discounted price bundles.

Now Pomerene offers bundles for over 250 services and procedures and is well positioned to attract price-sensitive consumers, including both self-pay patients and HDHP members.

Streamline Estimates with Episodic Bundling

Bundles Reduce Stress of Complex Purchase Decisions

Source: Butcher, L.. "Price Transparency: It's Time Has Come." Hospital and Health Networks Magazine, June 10, 2014, http://www.hhnmag.com/; Marketing and Planning Leadership Council interviews and analysis.

Pomerene Provides All-Inclusive Price Bundles to Self-Pay and HDHP Patients

Cost

All Inclusive Price Bundle

Price Component

Case in Brief: Pomerene Hospital

• 41-bed hospital in Ohio • Originally developed all-inclusive price

bundles to attract Anabaptist self-pay patients seeking low prices, simplicity

• Now offers price bundles for 250 services and procedures for self-pay, HDHP patients when they pay up front

Ancillary Fees

Surgeon/Doctor Fees

Hospital Fees

• Offered for 250+ services, procedures

• Used by self-pay, HDHP patients

3: Simplify Price Information


Another way providers can simplify price information is to add detailed explanations alongside financial information on patient bills and price estimates. This approach helps patients understand how each input (treatment plan, insurance benefit, and discounts) impacts their final out-of-pocket responsibility.

At Emory, patients receive a bill that outlines what each piece of information on the bill is and how it affects the price patients must pay. The bill clearly indicates out-of-pocket obligation and uses laymen’s terms to explain the various costs and insurance elements. The bill also has a free text field where staff can add notes that record their responses to any concerns raised by the patients during conversation.

Embed Education in the Estimate and Bill

Emory’s Patient Estimate Explains Each Piece of Information


1

2

3

4

Identifies each aspect of the billing estimate

Shows the amount the patient is responsible for

Provides clear definitions in laymen’s terms

Includes free text space for staff to add notes based on patient questions

Sample Patient Estimate


Once the price information itself has been simplified as much as possible, providers must systematically train patient-facing staff (scheduling or call center, registration, billing, financial counselors) to proactively provide patients with clear information about prices.

Pseudonymed Schrader Health System prepares its front desk staff and financial counselors to talk to oncology patients about their out-of-pocket obligations for their cancer treatment. Since the cost of oncology care can be particularly complex, financial counselors proactively meet with all patients with an estimated cost greater than $500.

The training process equips Schrader’s staff to manage a range of patient reactions while providing clear price information. Staff members are provided customizable scripting examples and practice having sensitive conversations through guided role playing exercises during in-person training.

4: Train Staff to Explain Price Information

Prepare Patient-Facing Staff to Manage Difficult Price Conversations

Equip Staff to Provide Information with Accuracy and Empathy

1) Pseudonym.

• In-person training intensives build staff confidence and expertise through role playing exercises

• Scripting examples help staff discussion out-of-pocket costs with sensitivity and manage range of patient reactions

Case in Brief: Schrader Health System

• Health system located in the Midwest

• Financial counselors meet with all patients with a single insurance provider or an estimated cost of care greater than $500 to provide them with an out-of-pocket cost estimate

Sample Scripting for Explaining Benefits

Benefits Explanation

Annual Deductible:

This is the annual amount that you are responsible for paying each policy year before your insurance company starts contributing to the cost of your care. Your annual deductible is _____ and, to date, you have met _____ of your deductible.

Copay:

This is the amount that you pay for your office visits. You probably are used to paying for these when you visit your primary care physician. This is the same thing but since this is a specialist office, the amount might be higher than what you’re used to paying. Your copay responsibility is _____ and it is due _____.


Components of Staff Training at Schrader1


Price variation, in particular, is a difficult concept for staff to explain. There are a handful of reasons why a patient’s charges might differ from a price estimate or what they paid for a previous encounter. Providing specific wording on these factors to patient-facing staff can help them address patient concerns about this variation.

Organizations should outline explanations for the four most common factors that impact patient obligation: payer coverage, provider choice, site of service, and patient charges.

Payer Coverage: What is the difference between commercial and government payers and how does coverage vary?

Provider Choice: How do individual provider choices regarding treatment affect prices?

Hospital Charges: Why are hospital charges for similar procedures different?

Patient Differences: How do severity of illness, site of entry, and length of stay impact patient responsibility?

Provide Scripting on Why Prices Vary

Guide Staff to Explain How Factors Influence Out-of-Pocket Costs

Source: BSA Health System, “Determining your Out-of-Pocket Costs,” http://www.bsahs.org/content/hospital-charges; Marketing and Planning Leadership Council interviews and analysis.

Sample Scripting to Use with Patients

Payer Coverage

Commercial insurance companies can negotiate discounts with hospitals on behalf of the patients they represent

Government-sponsored payers like Medicare often pay the hospital less than the cost to provide the care

“ “

Longer hospital stays are likely to result in higher charges

The costs of emergency services are included in patient charges

“ “

Patient Differences

Hospitals with the latest technology may have higher charges than those with older, less sophisticated equipment

Hospital charges may include laboratory work, x-rays, and other services performed

“ “

Hospital Charges

Some doctors may order different kinds of diagnostic tests or prefer different treatments

Physicians may involve other physicians in consulting roles, so charges can be generated by more than one physician for the same patient

“ “

Provider Choice


5. Promote Transparency Tools Across Multiple Channels

6. Solicit Patient Feedback

Building Awareness of Transparency Efforts


Consumer surveys, media attention, and policy conversations indicate a growing demand for price transparency: for example, The Advisory Board Company’s Primary Care Consumer Choice survey found that consumers would rather pay $100, drive 20 minutes, or choose another clinic than not know how much a visit will cost before receiving the final bill.

Despite this demand, transparency tool utilization data from payers and healthcare providers suggests that the pool of “active shoppers” still remains small. One health plan in the Midwest launched an online transparency tool in 2009, yet only 1.4% of their 350,000 beneficiaries have accessed the tool to date.

This means that in order to see returns from investments in transparency, providers must stir latent demand for price information. While patients indicate a strong interest in price discussions in advance of care, they often do not know what tools are available or when to use them. Providers must increase awareness of price differences and actively drive utilization of transparency services.

Prices Wanted but Rarely Sought

Patient Preferences for Transparency Not Realized By Providers

Source: Marketing and Planning Leadership Council 2014 Primary Care Consumer Choice Survey; Marketing and Planning Leadership Council interviews and analysis. 1) Pseudonym.

Compared to not knowing how much the visit costs until receiving the bill, patients would rather…

Go to another clinic for lab

tests, x-rays, or pharmacy

Drive 20 minutes to the

clinic

Pay $50 out of pocket

Pay $100 out of pocket

92% 76% 74%

38%

Brie1 Health Plan Offers Transparency, Finds Limited Utilization

Brie Health beneficiaries 350K Unique views of

online pricing tool 5,000 Of beneficiaries who accessed price information

1.4%

Results from Advisory Board Primary Care Consumer Choice Survey n = 4000


Consumers Unaware of the Price Problem

Since many consumers are still unaware of variable healthcare costs, providers should advertise price differences for lower-priced services such as urgent care.

Overlake Medical Clinics, a 349-bed medical center in Washington, promotes its urgent care center by explaining the cost-savings to a patient who chooses the urgent care facility over a competitor’s emergency room. At the same time, Overlake’s messaging highlights convenience and quality—tying all elements of the value equation together.

Providers that acknowledge price differences in the market benefit by both highlighting the attractiveness of their value and boosting their reputation as a patient-centered institution.

5: Promote Transparency Tools Across Multiple Channels

Incorporate Price Differences as Secondary Message in Advertising

Highlight Cost Savings Alongside Quality, Convenience to Promote Full Value


Supplementing the Key Differentiator

Quality, not price, is main message; lower price positioned as added bonus

Signaling Hassle-Free Experience:

Presenting cost of visit upfront implies straightforward, patient-friendly approach

Directing Patient Traffic:

Compares cost difference between the ED and UCC to encourage UCC utilization

Three Ways to Use Price Messages

1

2

3

Kathleen Sebelius, Former U.S. Secretary of Health and Human Services

“Currently, consumers don’t know what a hospital is charging them or their insurance company for a given procedure, like a knee replacement, or how much of a price difference there is at different hospitals, even within the same city…”


Publicly responding to critical media coverage on hospital prices presents another opportunity to draw attention to transparency efforts.

Shortly after Time’s cover story, “Why Medical Costs Are Killing Us,” executives at Baptist Health South Florida and Spectrum Health capitalized on heightened consumer awareness by publicizing their transparency efforts. Both executives offered a core message on price information and highlighted how patients can access price information.

Respond to Public Criticism to Enhance Reputation

Newsjacking Turns PR Frenzy into Competitive Advantage

Source: BHSF June 2013 Newsletter; Becker’s Hospital Review, http://www.beckershospitalreview.com/finance/spectrum-health-cfo-michael-freed-on-a-journey-to-price-transparency.html; Marketing and Planning Leadership Council interviews and analysis.

Translate Terms and Correct Misperceptions

“A hospital’s ‘charge’ is similar to the sticker price shown on windows of new automobiles. Rarely does anyone pay it.”

“With a telephone call or online submission to the CPO, patients can obtain the out-of-pocket estimate specific to their service, their insurer, and their benefit structure.”

Highlight Steps to Support Affordability, Transparency

Offer Consumers All Payer Price Information “In February 2008, Spectrum added average payments it receives from Medicare, Medicaid, and commercial health insurance companies.”

“The main reason why transparency is important is you have to establish trust with the community…The least we can do is to be open an honest with them.”

Cultivate Patient Loyalty by Adopting a Culture of Transparency

Baptist Health South Florida and Spectrum Health Publicize Their Transparency Efforts

Make a Statement on Price Information 1

Promote Transparency Efforts 2


Education, Access to Price Information

• Health pricing education materials

• Real-time chat with financial counselors

• FAQs with links to resources

2

In addition to public marketing efforts, providers can increase awareness by promoting transparency services when individuals are seeking a provider within their insurance network.

To ensure that employees learn about low-cost services, several providers offer employer partners with customized collateral and marketing materials.

Employee-centric resources might include inserts for new hire packets, tip sheets on discussing price with doctors, and clear instructions for how and when to access price estimates. Some providers even set up customized employee websites that connect price estimates with online appointment booking.

Engage Employer Partners by Offering Customized Employee Collateral

Empower Employers to Promote Informed Provider Choices

• Informational posters and email templates

• Educational fliers for HR, new employees packet, paychecks

• Printable tip sheets on benefits information

Ready-Made Promotional Materials

1

• Cost estimate tool pre-populated with plan information

• List of eligible locations

• Online appointment booking

Online Tools to Facilitate Prices, Appointments

3


Three Ways to Directly Assist Employers


Providers should actively solicit patient feedback to evaluate the efficacy of their transparency efforts and identify new opportunities and approaches. There are three ways organizations can collect feedback.

Some organizations use their Patient Advisory Council to identify the pricing and billing issues patients face. At council meetings, Spectrum Health pressure tests new transparency tools and awareness campaigns to gather input and ideas.

Others engage “secret shoppers” to test pricing office staff and then offer feedback on their experiences.

Finally, some organizations incorporate questions on price transparency tools or processes into their patient experience survey.

Transparency efforts require organizations to improve their price structure, process for communication, and awareness of tools. With this foundation, providers can begin to use transparency to actively compete for patients on price.

6: Solicit Patient Feedback

Evaluate Patient Experience to Improve Transparency Efforts


Three Tools for Soliciting Ongoing Patient Feedback

Use existing patient representatives to pressure test new price information tools and campaigns

Patient Advisory Council

Secret Shoppers Recruit patient volunteers to access and grade price transparency services

Patient Experience Survey

Gather responses on a large scale with a self-reported survey

Patient Feedback: Information is difficult to access

Is your price information readily accessible on your website?

Do you proactively offer price estimates to patients when services are scheduled?

Do all patient-facing staff know where to direct patients to get price information?

Do you advertise your price transparency tools to consumers? To employer partners?

Transparency Self-Assessment for Provider Organizations to Respond to Patient Feedback

Patient Feedback: Information is difficult to understand

Can all patient-facing staff provide basic information on how prices are generated?

Is price information available at a 4th grade reading level or below?

Is your price information available in languages spoken in your service area?

Patient Feedback: Estimates are inaccurate

Do you have a system in place to generate price estimates that accounts for insurance, financial status, and complex treatment?

Do you explain the limitations of available price estimates including why and how the final bill may change?

Do you clarify what charges are and are not included in the price estimate?

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