The Importance of Benchmarking Fees

Healthcare bills are notoriously hard to understand. There are gross charges, adjustments, allowable fees, copays, etc. With all of these categories, it can be tricky for the average patient to estimate the total cost. It would be like going onto Amazon, selecting an item, and then the price of the item changes as you are checking out. Confusing, right?

The healthcare industry needs to improve price transparency. In this digital age “consumers have become accustomed to comparison shopping online to get the best prices.”[i] Patients are more and more digitally savvy, and they comparison shop online for everything, from shoes to groceries to landscape companies. So, it would seem inevitable that patients are looking to shop online for healthcare in the near future. This is amplified by the rise of high deductible health plans, which leave the patients shouldering more of the cost than they had in the past.

How can a provider possibly publish fees online, and how can the patient understand them? A patient may see a charge for a surgery as expensive, when it is actually a competitive rate for a surgery. This is why it is important to benchmark fees against a standard schedule. Financial markets look to the DOW and S&P to gauge movement in the stock market. Healthcare can look to the Medicare fee schedule to gauge the prices being charged by a provider.

Health systems can publish their fees as a percentage of the current Medicare fee schedule. This way, patients can easily compare prices across providers and make a more informed decision.

This approach could help patients select a provider, but it could also help providers in comparing and negotiating with payers. Benchmarking fee schedules, running analytics on fee changes, and quantifying the impact to your bottom line is imperative to a successful business. We can assist providers by analyzing existing fee schedules, benchmarking fees and identifying key areas for negotiation with payers.

In the increasing complexity of the healthcare industry, help your patients and your bottom line by benchmarking fees.

[i] MarketWatch (May 23, 2018). Opinion: Finally, a simple solution to confusing health-care prices. Retrieved from https://www.marketwatch.com/story/finally-a-simple-solution-to-confusing-health-care-prices-2018-05-23