Transparency in healthcare: Where does it stand?

In a typical free market, consumer behaviour stays true to core economic principles related to supply and demand; however, in the US healthcare industry, certain economic principles apply, which influence consumers in a unique manner. Given the complexity of healthcare pricing and consumption, consumers are often ‘left in the dark’ when dealing with the true monetary cost of receiving treatment from a healthcare provider – whether it be for preventive reasons, an illness or injury or the delivery of a newborn child. To add another layer of complexity, there are also varying levels of price elasticity, depending on the condition, which also influence consumer behaviour. In fact, healthcare in the US is the only industry in which the ‘cost of care’ from the three main stakeholders – payers, providers and patients – is almost always different. The purpose of this paper is to explain how price and quality transparency affects consumer decision-making in the healthcare setting, to provide a background on various initiatives (state/federal/third party) that have taken place (or will take place) related to transparency, and ultimately provide recommendations to healthcare leaders on steps that can be taken to succeed in an increasingly transparent environment. By understanding healthcare consumerism and decision-making, healthcare providers can better prepare for value-based care, and understand and align healthcare charges to the true cost of care with the goal of more closely aligning with key stakeholders (patients and payers).