Week 6 Discussion Response- Healthcare Finance

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Week 6 Discussion

Healthcare Finance

Regulation, Policy and Economic Efficiency

Price transparency of hospital care is helpful for both consumers and health facilities because it facilitates the understanding of the cost of health services before they are provided. Price transparency enables patients to compare prices offered by various hospitals, know what to expect regarding out-of-pocket payments, and pick hospitals that provide better deals without compromising on quality. This practice helps prevent unpleasant surprises and makes patients' healthcare choices more informed. Health facilities also gain from price transparency due to increased consumer trust, greater accountability, and self-assessment of organizations' cost structures leading to cutting unneeded costs. As Getzen & Kobernick (2022) state, transparent markets help implement the idea of value-based healthcare through quality and price-based competition. Similarly, Glied (2021) notes that price transparency has the potential to improve consumer decision-making when pricing information is accurate and accessible.

Hospital cost transparency enhances economic efficiency by minimizing information asymmetry between hospitals and consumers. As consumers have comparable prices available to them, hospitals are forced to compete with each other on the basis of high quality but lower cost. Such competition minimizes cost variations for the same health care services while making efficient use of health care resources. The other party who benefits is the employers and insurance companies since hospital cost transparency enables them to practice value-based procurement. As mentioned by House et al. (2020), improved transparency creates a more competitive healthcare marketplace.

To enhance the comparison of costs at hospitals, there should be a requirement that all hospitals adhere to the Hospital Price Transparency Rule and post their charges in standardized, easily understandable formats for all routine hospital services. In addition, regulations should mandate that hospitals publish data on their performance on quality indicators, health outcomes, and consumer satisfaction to allow consumers to judge not only the cost but also the value proposition when making decisions (Hut, 2022). Stronger enforcement through meaningful financial penalties should also address noncompliance and ensure consistent reporting across hospitals. Such recommendations enhance accountability, facilitate consumer choice, promote and spur fair competition, and advance value-based healthcare by making everything more transparent and efficient.

References

Getzen, T. E., & Kobernick, M. S. (2022).  Health economics & financing (6th ed.). Wiley.

Glied, S. (2021).  Price transparency—Promise and perilLinks to an external site..  JAMA: Journal of the American Medical Association,  325(15), 1496–1497. https://doi.org/10.1001/jama.2021.4640

Hut, N. (2022).  When it comes to price transparency regulations, questions aboundLinks to an external site..  HFM (Healthcare Financial Management),  76(8), 34–38.

House, M. E., Hunt, S. D., & Umeh, A. (2020).  Improving price transparency for consumer health care servicesLinks to an external site..  Journal of Business & Behavioral Sciences,  32(2), 126–142.