Are Hospitals Still Focused On Pricing Transparency?

Pricing transparency has been the topic and trend in healthcare for the past few years.  The industry has responded with numerous research articles, solutions and products.  Hospitals have made prices more publicly available, reduced charges and restructured pricing methodology.  However, with pricing transparency being all the buzz, where has that left the focus on costs in healthcare?

Recently, at HFMA’s Annual Conference in Las Vegas, we asked respondents in a random poll: “What is your hospital currently concerned about?”  We found out that more than half (~55%), were currently concerned about costs, while only 20% were currently concerned about pricing.  Obviously the two are always going to be inextricably linked as they both impact profitability. Therefore, you can never be solely focused on pricing without considering the cost and vice versa. However, with all the attention pricing transparency has been getting we were a little surprised about the high concern with costs.

So let’s examine the Hospital Cost Index™ and what changes we have seen across the nation in the last few years.  For trending purposes, we will be looking at two specific metrics that make up the Hospital Cost Index™, Average Cost per Medicare Discharge case mix and wage index adjusted and Average Cost per Visit case mix and wage index adjusted.  The table below presents the 25th, 50th, and 75thquartile from 2014 – 2016 and is derived from public use files.

From the data we can see consistent growth in inpatient costs but virtually no change in outpatient costs. This may result from intense competitive pressure from free standing providers in surgery and imaging.

If you would like know how your hospital has trended give us a call at 888.779.5663.

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