What is price transparency in healthcare and how is it linked to patient satisfaction?

Cost transparency in healthcare is as crucial to patient loyalty as desired clinical outcomes.

This seemingly sweeping statement is backed by over 60% of patients. These patients say they would consider switching providers if they were dissatisfied with payment processes and cost discovery related to their care.

Healthcare price transparency means openly sharing understandable information about medical expenses. This is particularly crucial given that 75% of insured Americans worry about facing financial challenges from medical bills, according to a MITRE-Harris poll.

This makes healthcare price transparency an issue that certainly counts as a poor patient experience when not optimal. Practice managers and owners who aspire to retain valuable patients must focus on improving that experience.

Price transparency in healthcare refers to the clear and accessible disclosure of healthcare costs to patients. 

The goal of price transparency is all about building a better relationship between healthcare providers and patients. By being open about costs, providers can establish trust, make patients happier, and create a healthcare system where everyone is able to make informed decisions about their health.

Since January 2021, every hospital in the US is required to provide pricing information about the services and items they provide. July 2022 saw price transparency rules extended to include health plans and providers.

This information must be provided clearly in 2 ways:

These regulatory measures were introduced with an aim to enhance healthcare cost transparency. They also aim to give patients the knowledge they need to make well-informed health and medical treatment decisions.

A patient-centric model of care can extend beyond medical treatment to include cost transparency as a fundamental element.

There is a common myth that if healthcare providers implement best practices for revenue cycle management — such as collecting payments at the point of service — patient experience scores automatically drop.

The truth is that if providers lead with empathy, engagement, and empowerment by discussing financial considerations upfront, both patient loyalty and satisfaction scores will improve.

This approach paid off for Ballad Health, an influential healthcare system spanning across Tennessee, Virginia, and North Carolina. By taking a groundbreaking step towards transparency within the healthcare industry, they introduced a radical transparency model. This involved publicly disclosing negotiated payer rates for all the services they offer.

By openly publishing the negotiated rates with payers, Ballad Health provided patients, payers, and the broader community with unprecedented access to previously confidential pricing information. As a result, patient satisfaction rates jumped from 68% to 82% within a year.  

Their patients value the clarity and predictability of costs. This demonstrates the significant impact transparency can have on patient perceptions of cost.

At the ethical core of cost transparency lies a foundation of honest patient-provider communication. 

Honesty about medical expenses not only aligns with ethical standards but also strengthens the relationship. Patients appreciate straightforward communication about costs, which fosters an environment of trust and mutual respect.

Financial ambiguity in healthcare often induces stress and anxiety among patients. 

Clear and accessible pricing information alleviates these psychological burdens. Patients experiencing financial clarity exhibit reduced stress levels. This allows them to focus on their treatment and recovery without the added worry of unexpected or unclear expenses.

This is evidenced by the following specific patient pain points raised in the MITRE-Harris poll: 

And it’s not just about telling patients how much they owe. It's also about helping them be informed about their financial responsibility. This approach involves helping connect them to financial aid, determining if they are eligible for discounts, and setting up payment plans if required.

When patients receive medical bills with unexpected expenses, this can negatively impact their budgets, well-being, and economic situations. It also can make them reluctant to seek medical treatment in the future.

Juliette Espinosa, senior Medicare, Medicaid, and ACA Marketplace strategist at MITRE, explains in the MITRE-Harris poll findings, “Even those fortunate to have insurance struggle with bills that result from misunderstanding or underestimating deductibles, scope of covered benefits, and level of financial exposure for out-of-pocket costs of treatments and procedures.”

HDHPs are a type of health insurance plan with higher-than-average deductibles and lower monthly premiums. 

According to Tufts University, HDHPs were originally designed to incentivize consumers to make cost-conscious decisions about the healthcare they receive. The theory is that HDHPs help consumers avoid unnecessary healthcare — with strong financial incentives attached to avoid unneeded medical appointments and procedures and to seek out low-cost providers.

Several factors have driven this shift toward HDHPs:

HDHPs are often paired with Health Savings Accounts (HSAs) or Health Reimbursement Arrangements (HRAs). This allows patients to save pre-tax dollars for qualified medical expenses. This can allow patients to save for current and future healthcare needs tax-efficiently.

The downsides of HDHPs include financial strain, particularly for patients with chronic conditions or unexpected medical needs, potentially leading to delayed or deferred care. For example, among women diagnosed with breast cancer, being enrolled in an HDHP is associated with delays in diagnostic imaging, receipt of biopsy, early-stage diagnosis, and chemotherapy initiation.

In addition, plans can be complex. Understanding the specifics — such as deductibles, copayments, and coverage specifics — can be a challenge. 

There are 2 overarching ways to introduce transparent financial communication. The first is by encouraging financial conversations. The second is achieved by using the right technology, such as healthcare cost transparency tools, to both provide accurate healthcare costs and streamline processes. 

These conversations create opportunities to discuss and address financial aspects openly, ensuring patients have a clear understanding of their healthcare costs and responsibilities.

Best practice is to initiate financial discussions early in the care journey, preferably during the appointment scheduling or registration process. This allows patients ample time to understand and plan for their financial responsibilities.

Proactive financial conversations should avoid jargon and complex terms like copay, coinsurance, and deductible and instead communicate costs in clear, easy-to-understand language. Breaking down expenses and payment options ensures patients grasp the information effectively. 

Of course, many visits, particularly those to address acute concerns, will involve variable costs. Encouraging an ongoing dialogue about financial aspects throughout the care process helps keep patients updated on any changes in estimated costs or billing information and fosters transparency and trust.

By prioritizing these proactive conversations, healthcare providers pave the way for transparent, patient-centered care that addresses both clinical and financial aspects, ultimately improving the overall patient experience.

According to a recent study, the majority of hospitals and large health systems offer online price estimator tools; only 37% do not. 

The same study highlights pricing information that patients perceive as valuable when delivered electronically:

Optimized digital patient experiences include elements such as online support and secure online portals that enable patients to access their health records, test results, and communicate securely with their healthcare providers.

Introducing technology-driven solutions for accurate cost estimates is a significant step in addressing the evolving landscape of healthcare pricing. However, these technological advancements do not always prevent potential medical billing complications. 

Many legacy providers continue to take a traditional approach to pricing, where the emphasis is on what can be easily justified through publicly listed charges instead of responding to changing marketplace demand. 

Healthcare costs can be like a complex puzzle. They often involve negotiations with insurance companies, government reimbursements, and different levels of service. Ensuring this information is simple and accurate for patients and accurate for payers is a balancing act. 

To remain competitive, healthcare organizations must recognize the need for new, consumer-driven pricing models and effective strategies to conveniently communicate accurate price estimates. 

To do this, it’s important to compare and evaluate against the common market payment levels (such as using a resource like Turquoise Health), rather than solely relying on the listed charges.

By understanding consumer responsiveness to price changes, , the organization’s brand premium, and the pace of change in the market, it’s possible to support a more competitive and transparent pricing structure.

The easier it is for a patient to understand the cost and reimbursement of medical services before they are provided, the better the patient can be prepared for those upcoming expenses.  

This is why eliminating payment friction and improving patient payment experiences are crucial determinants of patient loyalty to their healthcare providers despite high levels of patient satisfaction with their care. 

Digital payment technology provides patients with easy access to options like Apple Pay and Google Pay, which positively impacts their healthcare provider choices. 

A recent Tebra study revealed that 66% of patients are more likely to pay a provider’s bill more quickly if given the option to pay fees online or on their phone.

Ease of access retains patients of various generations — an approach that will continue to grow.

Cost transparency in healthcare is no longer a "nice to have" but a fundamental element of a patient-centric healthcare system. 

Providers who prioritize clear financial communication and empower patients with cost information will build stronger relationships, improve patient satisfaction, and successfully retain patients. 

Tebra offers specific patient experience tools to help private practices and independent practice owners continue to deliver exceptional experiences while offering essential healthcare cost transparency tools.