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Price Transparency - Encouraging Your Employees to be Better Health Care Consumers

I was holiday shopping recently for video games.  I was able to look online at various stores that sold the same game and determine the price of the game, allowing me to comparison shop.  I took into consideration the best price and the convenience of the store location.  As it turned out, the more convenient location did not have the lowest price.  But, being a savvy shopper, I went to the more convenient store with a copy of the price from their competitor. The cashier quickly matched that price, no questions asked.  Now imagine a similar scenario when purchasing health care services – you can’t right?  While we may not be to the point of no-questions-asked price matching, we are in an age where price transparency is becoming more common and accessible to health care consumers.  And this transparency can have a decided effect on consumer behavior.

Pricing of health care services .  Pricing can vary greatly, sometimes by thousands of dollars. Consider the information in the chart below which compares pricing differences for some common procedures within a particular employer’s geographic area:



Location 1

Location 2

Location 3









Lab Services





The differences are startling. While many factors may contribute to these price differences, greater transparency as to costs can help inform consumer choice in a meaningful way.

Transparency tools .  So how is a consumer to know? Many States have price transparency/quality transparency websites (often required by state law), but they vary greatly in the accuracy of the information they provide as well as ease of use. One price transparency and physician quality report card , gives 44 states a grade of “F” grade for price transparency and 42 states a grade of “F” for quality transparency resources. Most insurance carriers also have transparency tools available to customers on their websites, and often reach out directly to patients in an effort to coordinate care and help patients understand their choices and the cost differences.  Finally, there are numerous commercial vendors which provide pricing/quality information often coupled with education, administrative support and the ability to integrate incentive platforms for employers who wish to motivate employees through financial incentives.

 The role of the employer . As an employer, it makes sense to encourage employees to use lower cost services that do not compromise quality of care. After all, every dollar saved impacts the overall health care spend of the employer. How can you do this?

  1. Evaluate whether a particular tool can help you achieve your goals . Does the tool provide:
    1. Relevant quality measures that are easy to understand?
    2. Comprehensive price data broken down in meaningful way for consumers?
    3. Adequate breadth and depth of information to serve the needs of the employer’s population?
  2. Understand your workforce . What will motivate them to use the tool?  Are they more likely to shop on the website or pick up the phone to talk to a representative? Would financial incentives (such as a percent of savings for choosing lower cost provider) make