ORLANDO — Though Steven Brill’s essay “The Bitter Pill” has spurred demand for healthcare price transparency, competition and the complexities of value-based payment has made that a much harder goal than thought.
“In a world where pricing should become less important, it’s actually becoming more important,” said Scott A. Schwab, senior manager at Ernst & Young, speaking at the Healthcare Financial Management Association’s 2015 Annual Institute. While value-based payments by nature make it harder to pin down fees for services, patients carrying a greater degree of the cost demand price transparency.
On the other hand, health systems face an even harder time turning profits as reimbursement rates fall, and value-based payments go up or down depending on the quality of the care and compliance with government initiatives. To close that gap, hospitals often have to raise prices.
“Somehow you have to make a margin, You have to generate revenue, especially today,” said James P. King, a partner at Ernst & Young.
That’s where it gets tricky, especially given pressures to drop prices to compete with new competitors like Theranos, a diagnostic testing company that has disrupted the market by pricing its test below what Medicare pays for them, often costing a patient just a few dollars.