Fitch: Hospital Price Transparency Could Disrupt the Current Business Model

CHICAGO--(BUSINESS WIRE)-- Fitch Ratings believes that growing demand for price transparency within the not-for-profit hospital sector has the potential to disrupt the current business model, according to a new Fitch Ratings report.

The growing demand for pricing information from employers, consumers and policy makers is challenging hospital providers and physicians to adopt a more customer oriented, retail business model. With consumers (i.e. patients and employees) of health care services shouldering a larger portion of the costs, there is growing demand for a clearer and more comprehensive and detailed explanation of expected cost and personal financial responsibility.

Similarly, policy makers and regulators at the federal and state levels have been driving change by developing legislation and policy to unlock the vast amounts of claims and cost data held by Medicare and state regulated healthcare insurers. With an aging population and a growing portion of governmental expenditures being consumed by healthcare expenses, policymakers are looking for ways to aggregate and analyze data in an effort to reduce the wide variation in reimbursement rates and outcomes.

As a result, providers are beginning to develop standardized approaches to the greater demand for price information and growing consumerism. Among other things, management teams are designating staff to train switch board operators and business office personal how to handle price inquiries and financial counselors to tailor the information to the specific consumer based on insurance coverage.

Fitch believes the demand for price transparency (and quality information) from purchasers and consumers are requiring healthcare providers to develop a "retail approach" to communicating their value proposition (i.e. price plus quality) for various clinical services. Similarly, the need to connect directly with prospective patients through the internet, social media and traditional advertising mediums will be increasingly important going forward.

The full report titled "Hospital Price Transparency: Impacts to Providers and Consumers" is available on the Fitch Ratings web site at www.fitchratings.com.

Additional information is available at 'www.fitchratings.com'.

Hospital Price Transparency: Impacts to Providers and Consumers

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=866951

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View source version on businesswire.com: http://www.businesswire.com/news/home/20150610005854/en/

Fitch Ratings
Jim Lebuhn
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Emily Wadhwani, FACHE
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Source: Fitch Ratings

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