Growing enrollment in high-deductible health plans (HDHPs) will be a major driver of the move toward healthcare price transparency and that move is expected to boost revenue for companies supporting that shift to $1.9 billion by 2016.
These are the findings of a recent report, “Price Transparency in U.S. Healthcare: A New Market,” released Thursday by research and advisory firm Aite Group. The report noted that banks, merchant acquirers, clinicians and hospitals can all expect increased revenue based on the growing consumer demand for greater transparency on healthcare costs.
“Historically, consumers experience ‘sticker shock’ when receiving a bill exceeding expectations, leading many to skip paying their healthcare bills altogether and increasing bad debt for providers,” said Michael Trilli, senior analyst in health insurance at Aite Group, in a prepared statement. “Also, consumers increasingly find that they cannot understand their healthcare bills, leading many to simply not pay. Greater transparency is a consumer benefit that now presents strong revenue opportunities, benefiting the key players and the consumer.”
According to the research, the total market for price transparency products and services was $540 million in 2012 and will increase to $3.09 billion, which translates to a compound annual growth rate of 55 percent over the span of 2012 to 2016.
While the expected increases in HDHPs is a major driving factor in these projected increases, they are not the only factor, Aite researches said, particularly as the move toward healthcare consumerism is expected to also be affected by people buying health insurance on the state insurance exchanges starting next year.
In addition, legislative changes wrought by the Affordable Care Act have provided opportunities for new market entrants to address three “pain points” in the move toward greater price transparency:
- Choosing providers based on value: while traditionally-insured consumers select a doctor based on whether they are in their plan’s network, the shift to consumer-driven healthcare plans means they will make decisions based on higher value and lower price.
- Sticker shock: Historically, HDHP consumers have experienced "sticker shock" when receiving a bill exceeding their out-of-pocket expectations. This leads to many not paying their bills and increasing bad-debt write-offs for healthcare providers.
- Unclear bills: As more consumers became responsible for payment, many have found that they cannot understand their bills. This frustration has led many to not pay, again fueling bad debt for healthcare providers.
“In total, 75 million U.S. healthcare consumers have a serious reason to be more price sensitive than do traditionally insured consumers,” the report stated. “The demand for greater price transparency is not exclusive to HDHP consumers, however – uninsured consumers and non-HDHP-insured consumers also seek out information that aligns the quality of care with the cost of receiving that care.”