With healthcare costs increasing, on average, by 5% each year1, consumers have been looking for alternative ways to get the healthcare services they need. However, with a recent executive order signed by President Trump, consumers will have greater control over knowing exactly what they will pay for their medical care.
The latest executive order, signed on Monday, June 24, 20192, targets insurance companies, doctors, and medical providers and hopes to force them to disclose more information about what they charge for their services. According to the executive order, the Department of Health and Human Services (DHHS) will require health and wellness providers to show patients a detailed breakdown of their negotiated rates as well as any out-of-pocket costs before medical treatment or procedures are performed. In this way, consumers gain complete transparency and can be better informed as to the total costs of care without getting hit with unexpected and often expensive out-of-pocket costs.
Similar to the price transparency legislation passed in 2011, the full fare advertising law3 requires airlines to disclose the full price that the consumers will actually pay for air travel, including any airline fees and taxes. This enabled consumers to better understand the cost of their airfare and prevented airlines from adding in hidden fees. The new price transparency legislation will serve to give consumers more power and control over how they manage their healthcare, as consumers will know exactly the costs associated with services and be able to price compare among healthcare providers.
Over the past decade, health consumerism has been on the rise. With more access to information, consumers are able to be more selective in how they choose and if they use medical services. In addition, the advent of wearable medical devices, the popularity of health-related mobile apps, and the increased access to alternative lifestyles (gluten-free and organic eating) consumers are becoming more aware of how to improve their health outcomes outside of using traditional medical care services. Adding in price transparency will serve to give consumers yet another tool to make more informed healthcare decisions.
The new executive order addresses more than just price transparency. It also outlines the need for the administration to provide valuable data to researchers and healthcare providers to help them develop tools to provide patients with immediate access to healthcare prices and other important healthcare quality information needed to help them make an informed decision. Not only does this new legislation revamp how medical companies handle patient access, but it will serve to also require them to create online systems and procedures to ensure this pricing information is readily available to the general public. Some medical and economic experts suggest that though this level of price transparency is great for consumers, it could ignite a pricing war among healthcare providers. Competing companies would have access to each other’s negotiated rates and this could highlight where insurers are overcharging or undercharging certain providers. Not to mention, with price transparency, the margins medical providers have benefited from could quickly dwindle and choosing a healthcare provider could become a low-cost “game”.
The Trump administration sees this new executive order as just one of several that may be enacted over the next few years. In fact, the President has ordered DHHS officials to review additional legislation that could increase patient access and prevent price gouging by large insurance companies and medical providers.
Though the effects of price transparency in the medical industry are yet to be seen, it will likely change how health and wellness companies market. Prices may need to be included on marketing materials, websites, and even promotional posts. In this regard, as price becomes front and center (and likely the same across providers), healthcare marketers will need to be sure to focus on the intangible benefits that differentiate their care from their competitors. Conducting more in-depth patient analysis to fully understand target demographics and psychographic profiles will become key in crafting marketing messages that are able to immediately resonate with patients.
Savvy healthcare marketers should take note and begin adapting their marketing strategies now before the next round of legislation hits. Healthcare consumerism is a revolution that is here to stay and government regulations are enabling consumers to have even more control over how, when, and if they make a purchase. As consumers gain greater access to information, attracting and engaging them with your company will become harder and harder as competition within the industry increases. It’s time now to find innovative ways to both keep your patients informed, while showcasing your company’s unique value proposition.
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