As of Jan. 1, 2021, U.S. hospitals are required by federal rule to post all of their prices online in an “easily accessible and searchable” format. The primary purpose of the Hospital Price Transparency Rule is to allow Americans the opportunity to find the most affordable prices for shoppable services before they’re rendered.
However, as of February 2023, less than a quarter of hospitals are in compliance with the price transparency requirement. While most hospitals have at least begun the process by posting price-related files, the majority of them are “incomplete, illegible,” or lacking “prices clearly associated with both the payer and the plan,” per the latest report from PatientRightsAdvocate.org.
Still, some hospital staff may worry that price transparency could work against their efforts as business institutions, even while supporting the patients and payers that serve as customers.
But the transparency rule can work in providers’ favor as well as patients’. Here’s how.
1. Price transparency increases patient trust.
Per a recent secret shopper study published in JAMA Internal Medicine, even those hospitals that do have their prices online are plagued by inconsistencies. The secret shoppers, who called hospitals as well as searching for prices online, found that estimates gleaned in these two ways often differed by 50% or more.
It’s only natural that such inconsistencies would work to decrease patient trust in such providers — after all, if the hospital itself doesn’t know the cost of its services, what other details might it overlook?
In the absence of any accessible pricing at all, it can also be easy for patients to think they’re being swindled, especially when prices can vary significantly not only from hospital to hospital, but also from patient to patient.
Accurately listed prices, on the other hand, can work to increase patient trust by proving to them that the institution has their best interests in mind.
2. Accurate online pricing can increase customer loyalty.
Increasing patient trust is good for both patient and provider morale — and it’s also a way to increase customer loyalty. And given that 80% of patients, according to one NCR Health survey, said they’d change providers for “convenience reasons” alone, any method of increasing patient loyalty can be an extremely valuable one.
Patients who know they will find accurate prices reflected online for shoppable services may be more likely to return to that provider for future services, since price estimates can help them budget for their needs ahead of time. Additionally, hospitals with lower prices would obviously benefit from patients’ comparison shopping; according to that same survey, 20% of patients would switch providers to save as little as $500.
3. Price transparency may promote competition — and innovation.
Obviously, price transparency best benefits those hospitals that are able to provide services at a lower cost to patients and payers. While this may seem like a disadvantage for hospitals with higher operating costs, the competition promoted by this system can breed innovation and help hospitals run more efficiently in the long run.
For example, one June 2023 study found that ChatGPT-4 was 98.4% accurate in choosing the correct diagnostic test to screen for breast cancer — up from ChatGPT-3.5’s 88.9%. Developments like these suggest that artificial intelligence and machine learning may help providers create new diagnostic protocols and standard operating procedures that can save providers time and, therefore, both hospitals and payers money.
4. Price transparency makes healthcare more affordable for patients.
It’s not news that American healthcare is costly. According to recent data, the average cost of health insurance in the U.S. is $560 per month for a 40-year-old with a Silver plan — and that’s before any copays or deductibles.
Medical debt continues to be one of the biggest causes of personal bankruptcy in the United States, and the medical bills themselves are compounded by lost wages when patients are forced to miss work.
Any program that can help right these wrongs in the American healthcare system is a boon to each and every American, including those who work in hospitals — and price transparency can help.
5. Hospitals that don’t comply can be fined.
Finally, hospitals that don’t comply with the federal rule may be subject to fines by the CMS. Over a dozen hospitals already have been hit with hefty penalties, several reaching high into the six figures. While the number of hospitals that have been fined far undercuts the number of hospitals that remain noncompliant, the risk remains and the penalties are being publicly called for by journalists.
Like any new system implemented at a wide scale, price transparency may take hospitals some time to come into compliance with. Doing so, however, can reap benefits not only for patients, but providers as well.
By boosting opportunities to increase patient trust and loyalty, promote competition and innovation, and help patients access affordable care, the Hospital Price Transparency Rule can make the healthcare industry a better place — for everyone.
Joseph Muscente
Joseph is a Content Marketing Analyst at LendingTree where he works to empower people to make their best financial decisions. He earned his B.A. from Penn State University.
