How to position your organization for success
The Centers for Medicare and Medicaid Services’ new rule on hospital price transparency went into effect on January 1, 2021. A recent analysis from Guidehouse found that approximately 70% of hospitals are already compliant with this regulation1. But being compliant does not mean that you are leveraging hospital pricing data for strategic advantage. Is your hospital or health system prepared to optimize your price transparency information to best position your organization? With a laser focus on meeting the requirements of the regulation, hospitals and health systems may have lost sight of the tremendous strategic value of the data. Executives are now asking how they can use this new data to better validate and triangulate their insured patient reimbursement strategy to maximize their resources. The time is now for hospitals and health systems to use price transparency data to their benefit and arm themselves with information. Without a thorough understanding of what’s behind the numbers, the pitfalls are plentiful – being manipulated by payers; developing a reputation as the high-cost provider; and overcharging and under delivering when it comes to the overall service and experience.
Here are four actions you can take now to leverage price transparency data to your advantage and set your organization up for success.
1. Understand your pricing data from top to bottom.
In the new world of price transparency requirements, all parties will gain new insights to leverage for their advantage. Payers will use the lowest negotiated pricing information to push individual provider reimbursement rates to the bottom while health care providers will use the payers’ highest negotiated prices to push individual insurer reimbursement rates to the top. The likely outcome will be a mad dash to the middle.
Do you know your numbers and are you ready to defend them? Thoroughly understanding your pricing data will prepare you to succeed at the negotiating table where payers have a comprehensive analysis of not only your data but the full marketplace.
Prior to sitting down to negotiate, identify your pricing strengths and weaknesses.
Position your organization within the context of the competitive marketplace.
Be ready to explain the details – such as significant pricing variations within your hospital or between your hospitals if you are part of a multi-hospital system – that could negatively impact your negotiating power.
2. Strengthen your bottom line.
Are you using your investment in pricing data to inform your business strategy and fine tune your balance sheet? The new regulation provides an opportunity to analyze how you run your business.
Right size your roster of services. Use your pricing data to identify profit winners and losers.
Determine a strategy that focuses on your core competencies – services with competitive pricing and quality outcomes.
Use your pricing data knowledge to strengthen your position with payers.
3. Size up your competition to position yourself in the market.
Does the health care marketplace see you as a high-priced or low-priced provider? If the data show you are charging significantly more for a service than other hospitals in your system or compared to competitors in your marketplace, can you successfully explain why?
Being ready to answer these questions may be more difficult than you realize. With each hospital tackling the challenge of posting its pricing data, differences in interpretation of the regulation may create variations in the type of available data, making apples-to-apples comparisons almost meaningless for you, your competitors, and consumers.
If your data differentiates your hospital as the high-priced provider on core services that are critical to your bottom line, be prepared to justify your premium position with demonstrated market-leading quality outcomes.
If you are a lower-priced provider, use data on the quality of your outcomes to boost the reimbursement you receive for your services.
4. Prep your communications playbook.
While price transparency may not be on most consumers’ radar screens now, it is only a matter of time before local news coverage or social media posts put it front and center. What will your pricing information reveal to the public about the value of the services you deliver? Do you offer consistent pricing for the same services across regions? How do your prices compare to your competitors?
Don’t let others tell your brand story. Tie pricing to your core competencies and emphasize your expertise, experience and demonstrated quality outcomes to build brand differentiation.
Gain clarity on your pricing story. It will help you prepare to proactively communicate with stakeholders, allowing you to put your pricing information in context to protect your brand.
Price transparency is here to stay and it’s going to become a bigger and bigger part of how you manage payor and public perception. Work with us to determine a roadmap of where the red flags are in your pricing story and develop a strategy to leverage price transparency data to your advantage.
Let Sutherland help your hospital navigate the Price Transparency landscape. To learn how we use a combination of advanced analytics, artificial intelligence, robotic process automation, and data expertise to meet compliance requirements, reinforce the value you bring to patients and negotiate payer contracts, get in touch with our experts today.
1 Resource Constraints Trouble Hospital Price Transparency Compliance, revcycleintelligence.com.