COGNIZANT CONSULTING

Helping organizations engage people and uncover insight from data to shape the products, services and experiences they offer

Learn More

Contact Us

THANKS FOR YOUR INTEREST IN COGNIZANT.

We'll be in touch soon!

x CLOSE

Refer back to this favorites tab during today's session for access to your selections.
Refer back to this favorites tab during today's session for access to your selections.x CLOSE

Perspectives

Winning in the Healthcare Price Transparency Era: Understanding and Attracting the Healthcare Comparison Shopper (Part two of a three-part series)

2020-05-21


Empowered healthcare consumers will use the new published prices (with quality information) to comparison shop, defying industry skeptics. We believe the COVID-19 pandemic and stay-at-home policies will accelerate the use of price comparison by consumers.

Many industries, from energy to retail to travel and hospitality, have adopted transparent pricing and expect — and even assist — their customers to shop for the best value. In healthcare, the truism has been that not many consumers comparison shop, even when price information is easily accessible. In fact, in one recent study, nearly 64% of providers said the industry’s new price transparency rule would have little impact on how consumers choose health services.

The Centers for Medicare & Medicaid Services (CMS) begs to differ. By January 2021, the CMS rule requires providers to publish their payer-specific negotiated prices, including minimum and maximum negotiated charges for 300 shoppable services. The agency expects that data to enable healthcare consumers to make direct, apples-to-apples comparisons of “common shoppable hospital services” across different providers. It’s been difficult for consumers to make such comparisons in the past due to unavailability of easy-to-understand pricing information and limited reference pricing. While 21 states have previously required publication of health prices, only seven have published consumer-oriented data — and not in a uniform way.

But when consumers have clear comparison data about health service costs and quality, the evidence reveals that they do shop. In California, research showed that after enrollees were given shoppable prices for hip and knee replacements, consumers chose low-cost facilities 21% more frequently and high-cost facilities 34% less often. Prices at high-cost facilities subsequently declined by 18%. And a study of plan members in Massachusetts showed that they price-shopped for inpatient services, which would translate into a 53% volume increase for providers in the lowest cost tier.

While transitioning to a price transparency paradigm in healthcare will be challenging for providers, they can go beyond mere compliance with the CMS rule set to engage healthcare consumers and patients in new ways relating to how health services are priced and paid. Accomplishing this requires providers to more deeply understand the market areas and the communities they are obligated to serve, and to help healthcare consumers shop for services. Adopting these strategies will equip providers to compete effectively in the industry’s emerging care-on-demand, consumer-driven and price-sensitive platform business models.

Understanding the healthcare consumer

Making the most of a price transparency paradigm requires providers to do more than simply publish prices. They must understand the consumer personas in the communities they serve, just as banks, financial services firms, retailers and other businesses do with their target markets. Persona-building requires understanding and customizing the care delivery to the precise needs of their communities. It also means comprehending generational attitudes and emotions concerning money, healthcare and overall service expectations.

For instance, baby boomers are generally somewhat less price-conscious, with 65% researching health costs before accessing services compared to 84% of millennials. Further, just 34% of boomers say out-of-pocket estimates affect their choice of provider, while 60% of millennials say these costs factor heavily into their decision making. Each group generally has different health concerns, though these may vary by geographic location.

 

 

Providers will need to offer different service delivery and consumer experience options based on generational expectations of their local community members. Boomers generally prefer in-person or voice conversations and personalized information. Easy-to-use digital tools might encourage some of these individuals to transition away from the telephone and physical interactions to virtual agents or tele-health platforms.

Gen Xers and millennials expect an Amazon-like experience. Price and quality information have to be easily accessible, and they want the convenience of self-service tools such as online bill pay and appointment self-scheduling. Their preferred communication channels include auto-texts and notifications. These younger consumers are also quicker to adopt new digital trends in care delivery, such as tele-health, which is expected to grow consistently even after the COVID-19 crisis is over. Given that tele-health service costs are favorable when compared with traditional care delivery, it will always be a preferred option when price shopping for services.

Whatever solutions they adopt, providers can help consumers understand the different pricing options and their impact on their local communities. Providers that move quickly to comply with transparency can own the local quality vs. cost messages and become even more embedded in their communities. They can educate consumers about measures like outcome efficiency and share quality data to illustrate why neither the lowest nor the highest “list prices” necessarily correlate with quality.

Providers that deliver clear pricing and valuable complementary services to cost-conscious, data-empowered healthcare consumers should be well positioned to establish themselves as the trusted healthcare partner in their communities. To be on the strongest footing in the on-demand healthcare market, providers must understand their financial position — including costs and how to set optimal prices, a topic we’ll cover in part three of this series.

For more on price transparency, read part one of this series, "Embracing Price Transparency: A Clear Strategy for Winning in a Consumer-Driven Healthcare Industry.”  

To learn more, visit the Healthcare section of our website or contact us.

This article was written by Kinshuk Kaushik, Ruchi Mishra, Randall Nash, Srivaths Srinivasan and MaryKathleen Viloria of Cognizant’s Healthcare Consulting practice.

Related Thinking

Save this article to your folders


Save

PERSPECTIVES

Embracing Price Transparency: A Clear...

Price transparency is not going to fade away. Healthcare consumers and...

Save View

Save this article to your folders


Save

PERSPECTIVES

How Life Sciences Supply Chains Must...

As the pandemic has revealed, life sciences companies must significantly...

Save View

Save this article to your folders


Save

PERSPECTIVES

COVID-19: Accelerating Industry 4.0: A...

Digital tools can equip manufacturers with the foresight and resiliency...

Save View
Winning in the Healthcare Price Transparency Era: Understanding and Attracting the Healthcare Comparison Shopper (Part two of a three-part series)