Competitor price research is an essential part of keeping any business competitive. But for hospitals, that research has historically been difficult.
The CMS’s Hospital Price Transparency Rule is changing that: now that hospitals are required to post their prices publicly, it’s easier for operators to see what their competitors are charging and use that information to inform crucial business decisions.
Here are three scenarios where publicly available hospital pricing data can provide value when used as a benchmarking tool.
1. Community Hospitals: Get a Snapshot of Regional Prices
For the purposes of this article, we’re defining “community hospitals” as those that mostly serve a local population. These hospitals compete primarily with others in their city or region, so understanding what those hospitals are charging for common services is crucial to remaining competitive.
Already, we’re seeing hospital groups make big decisions based on newly available pricing data. For example, a group of New Jersey hospitals run by Prime Healthcare reportedly learned that one of the country’s biggest health insurers (UnitedHealthcare) was compensating its hospitals at far lower rates than what it was paying others in the region.
In some cases, compensation rates were 50 percent below what UnitedHealthcare was paying other hospitals. After months of unsuccessful negotiations, Prime reportedly made the decision to no longer accept UnitedHealthcare insurance plans.
On the other end of the spectrum, Indiana’s IU Health announced a price freeze on its services after getting unwanted attention for prices that were apparently higher than similar groups in other states.
In both cases, pricing data was a crucial factor. Without it, the hospital groups wouldn’t have had the necessary context to make the decision to keep it competitive with their peers.
Read more: 3 Key Benefits of Stronger Acceptance of the Hospital Price Transparency Rule
2. Specialty Hospitals: Understand Pricing at Your True Competitors
Unlike regional hospitals, specialty hospitals attract patients from around the country – and even around the world (Mayo Clinic, for example, treats people from more than 140 countries.)
For these hospitals, understanding local prices is less important than understanding rates at other specialty providers, which may be scattered around the country, as is the case with top children’s hospitals.
And rather than understanding prices in the context of patient expectations, specialty hospitals may be more invested in how those prices affect their ability to attract and retain world-class talent and maintain world-class facilities.
Knowing exactly what insurers pay competing hospitals for various services is a powerful negotiating tool that can help specialty providers ensure they’ve got necessary funds to maintain their top-tier status.
3. Growing Hospital Groups: Research Potential Expansion Markets
A third scenario where pricing benchmarks can prove valuable for hospital groups is researching new markets.
Understanding pricing in a new market can help hospitals not only negotiate competitive rates with insurance providers but also effectively position and market their services when they open a new hospital or a facility in a new market, as we’ve written about in the past.
As of now, hospitals may even be able to market themselves on transparency itself, if their research shows that other hospitals in the region haven’t yet published pricing information. The latest data suggests that more than 40 percent of hospitals are still nowhere near compliance with the Hospital Price Transparency Rule, having published “no or few” pricing files or else only “standard charges” – that is, prices that don’t reflect actual negotiated rates.
Use Pricing Benchmarks to Drive Business Decisions
Pricing data is a powerful tool that can guide important business decisions – but right now, it’s scattered across the internet in a variety of formats, making it difficult to actually use. That’s where Healthcare Data Analytics comes in.
We’ve spent the last year gathering, cleaning, aggregating, standardizing, and monitoring pricing data from hospitals around the United States. And we update these files regularly. We can put together a custom report of the specific hospitals whose prices you’d like to use as a benchmark, whether that’s all the hospitals in a given region or a hand-selected group of specialty providers around the country.
Contact us to set up a platform demo or hear more about how we can deliver the pricing data you need to make the decisions that drive your organization forward.