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Price Transparency Will Save Healthcare $100B: How ASCs Are Taking Advantage

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The Gary and Mary West Health Policy Center released a report on May 15 detailing potential savings from price transparency in healthcare. According to the report, greater information on healthcare prices could reduce United States healthcare spending by an estimated $100 billion over the next 10 years.

"While healthcare transparency is typically viewed through the lens of patient-facing transparency tools to drive comparison shopping, our analysis suggests even greater impact could be achieved by expanding the audience for such information," said West Health Policy Center Board of Directors Chairman Joseph Smith, MD, PhD.

The report identified new policy proposals driving the transparency and cost savings:

•    State all-payer health claims databases used to report hospital prices could save up to $55 billion by making employers more aware of price differences and increasing pressure on high-cost providers to reduce their prices
•    Electronic healthcare record implementation requirements provide prices for physicians ordering diagnostic tests and the ability to create patient-specific treatment plans, which could save up to $25 billion
•    Health plans are now required to provide personalized out-of-pocket expense information to enrollees, which is estimated to reduce healthcare spending by $15 billion to $20 billion because most companies do this already, but many patients don't pay attention to the prices

"If you are not changing, you are falling behind," says David Miller, President of Nueterra Global Alliance. "Change is eminent and I think surgeons and surgery centers have to be aware of what is going on in healthcare. It's better to be early adopters than late to the game."

Price transparency isn't a silver bullet to reduce all excessive healthcare spending, notes the report, but it can certainly steer patients, payers and providers in the right direction. Medicare now releases hospital chargemaster data on highest-cost procedures, and individual physician payments for procedures such as eye surgery, colonoscopy and spinal fusion are available for all to see.

ASC data isn't currently released publicly, but with quality reporting requirements some in the industry feel it's a matter of time before that data is released as well. In the meantime, patient demand will drive price transparency

"I think people are going to become more educated about their healthcare purchases and they will demand transparency on quality, outcome, patient satisfaction and cost," says Mr. Miller. "If you are looking 20 years down the road, everyone's commode will be open and we'll know the price, profits being made, quality and satisfaction scores."

There are several ways ASCs can benefit from becoming more price-transparent and creating packaged pricing. "We're bringing in new revenue opportunities for ASCs they wouldn't otherwise have," says Mr. Miller. "Physicians in many markets are now going back to the employed model and ASC revenue is slipping. The biggest play we have is to bring in new patients from self-funded employers or international travelers to seek care at their centers. International patients will pay for the quality they get in the United States and it's a revenue stream free of domestic regulation."

Packaged pricing
The cornerstone of Nueterra's business is price  transparency, as the company does business on an international level to connect patients and self-funded employers to high-quality, low-cost healthcare; many times that includes directing them to ASCs. "As we were vetting our business model, we found that discounts off chargemaster data were not consistent and people didn't want that," says Mr. Miller. "We needed packaged pricing and transparency to succeed in the international market."

Much like a "bundled payment" concept, packaged pricing includes a base physician, facility and anesthesia fee; the price could vary based on the complexity of the case or unique patient factors.

"The customer doesn't want to receive a discount and then be nickled and dimed for band-aids and swabs," says Mr. Miller. "They want to know how much it will cost so they can make an informed decision about where they want to go for care."

In May, Bedford (N.H.) Ambulatory Surgical Center partnered with health plan Harvard-Pilgrim Healthcare for bundled rates on routine colonoscopy. The rates include fees for the surgeon, anesthesiologist and other clinicians. The ASC had bundled payments for colonoscopy and esophagogastroduodenoscopy designed for uninsured patients for several years prior to the new partnership.

"I think more and more bundled programs will be coming down the way — it simplifies the system, reduces confusion, it's all upfront," said Bedford ASC Director of Business Strategy Chris Henderson in an InsuranceNews report. So far, more than 40 patients have used the new bundled payment program.

Publishing prices online
Another growing trend in the ASC space is publishing prices online. Centers like the Surgery Center of Oklahoma are able to attract medical tourism patients from around the United States and Canada for surgery while pressuring local hospitals to bring their prices down as well.

MEDARVA Stony Point Surgery Center in Richmond, Va., first posted out-of-pocket costs for 25 to 30 of its most common surgical procedures across several specialties. "There were several factors that motivated us," says CEO of MEDARVA Healthcare Bruce P. Kupper, MHA, FACHE, in a Becker's ASC Review report. "First of all: transparency. We want to let people see what things really cost. Recently there have been several articles in the local newspaper examining healthcare costs and comparing prices at nearby hospitals. We felt this was an opportunity for us to educate the community on ASCs, a low-cost, high-quality alternative to the traditional acute care hospital."

It took six weeks from making the decision to publish prices online to actually going live on the center's website. The steps Mr. Kupper and his team took included:

•    Identifying most common procedures
•    Pricing for most common procedures
•    Research prices on insurance company websites for comparable pay
•    Ensure posted prices will cover costs

MEDARVA Stony Point Surgery Center already had cash-pay pricing calculated and available for patients at the center before deciding to post prices online, but not every center is at that stage yet.

"It's easy to get providers to say they want access to international patients and self-insured employer groups, making the verbal commitment to packaged pricing," says Mr. Miller. "However, most groups aren't aware of their true costs. We work diligently with them to come up with the packaged price."

Industry evolution
Additional forums for price comparison online are sprouting up as well. President of Surgical Notes and Surgery Center Network Jeff Blankinship launched a direct-to-consumer surgical solution and education platform called "I Need a Surgery" earlier this year designed specifically to bring price transparency to surgery and ASCs. In June, five surgery centers also listed their prices with PricingHealthcare.com, a database designed to help patients price compare.

"I think there remains a vital niche in the healthcare industry for the independent ASC. We at Stony Point Surgery Center do everything we can to stay independent and price transparency is one way to do this," says Mr. Kupper. "Across the board, awareness of ASCs has been lacking. Demonstrating our value to the community has been a missed opportunity. I hope the ASC community will take price transparency and discussing the value that ASCs bring to healthcare and run with it."

Mr. Miller has been working with payer groups in several states who are sending their employees outside of the country for quality healthcare at a lower cost. Instead, he proposes a domestic network of packaged pricing at ASCs and surgical hospitals, and payers are paying attention. However, not all surgery centers are excited about price transparency; some who have out-of-network contracts fear publishing their prices for cash-pay patients or bundled payments will put the OON rates in jeopardy.

"Some ASCs have made a lot of money over the past decade on OON contracts and they are the ones who fight price transparency," says Mr. Miller. "But those that adapt will have more opportunity to generate new business. We are just scratching the surface now in offering our narrow network. ASCs that accommodate the self-funded employer packages and can move quickly will have the windfall in the short and long term. Others will adopt over the next five years or see their revenue fall off the shelf."

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