North Carolina the Latest to Embrace Hospital Pricing Transparency

Aug. 23, 2013
A recent law passed in North Carolina shows that pricing transparency in healthcare has reached the tipping point. No one, not even the most cynical of observers, can ignore the momentum this movement has gained.

Momentum is a funny thing. In sports, you often don't recognize when one team has gained momentum until it's too late for the other team. Only then, do the announcers look back and say, "This is when the momentum shifted." 

It's like that in life too. Typically, you're not having a bad day until the third or fourth bad thing has happened to you. A TV show isn't a breakout hit until everyone is talking about it the next day at work, or calling the police when it's airing and the reception goes out. It's that point of no return, where something has gained so much momentum that it's become impossible to ignore. This was essentially the basis of an insightful book from Malcolm Gladwell called The Tipping Point. 

Pricing transparency in healthcare has reached that point. No one, not even the most cynical of observers, can ignore the momentum this movement has gained. 

This week, I was fascinated to hear that North Carolina Governor Pat McCrory signed into law a bill that requires hospitals to provide public pricing information on 140 medical procedures and services. Hospitals and ambulatory surgical centers will be required to submit pricing information to the North Carolina Department of Health and Human Services (DHHS) on its 100 most common inpatient procedures, 20 most common surgical procedures, and 20 most common imaging procedures. 

"For too long North Carolina patients have been in the dark on what they can expect to pay for common medical procedure when they are admitted to a hospital. This new law gives patients and their doctors pricing information so they can make informed financial decision with regard to their healthcare," Governor McCrory said in a statement. 
McCrory's statement was buoyed in the press release by a study from The News and Observer out of Raleigh, which found that in 75 percent of the 100 most common procedures and services it examined, the highest price was triple that of the lowest price. When the Centers for Medicare & Medicaid Services (CMS) released data on hospital outpatient charges for 3,000 hospitals back in May and June, these kinds of findings were typical. 
Admittedly, I've harped on about this subject all year long. I can't help it though, this is transformation right before our eyes. It's happening.
There are skeptics, such as this blog on Forbes, which essentially says all of this transparency will mean nothing because hospitals can't afford to lower costs. Most hospitals, the blogger says, operate under extremely low margins. 
While this is true, as I argued in my previous blog on this subject, there is still an "and then," to the whole pricing transparency movement that can make it work. Patients must be engaged enough to act upon this data and providers must educate patients to contextualize it. For that to work, providers must be reimbursed for quality and not quantity. This is movement is at a starting point. 
But even though the story isn't yet completed, it's encouraging to see the pieces being put into place. It's not just in North Carolina either. It's in Detroit, where payer, Priority Health is offering its consumers a provider comparison tool that looks at pricing, quality, and reviews. It's in Tennessee, where Change Healthcare is raising significant funds to build out its pricing comparison products. And it's happening in New Hampshire and in Oklahoma, and in many other places.
I look forward to seeing how long this momentum can last.
As always, I want to hear your thoughts. Feel free to leave comments below or respond to me on Twitter by following me at @HCI_GPerna.

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