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Imaging's escalating price problem—and how you can respond

October 28, 2017

    More and more, patients call to request price estimates. Referring providers question the cost of your facility's imaging services. Payers steer patients to lower cost competitors.

    The market may be demanding lower-priced imaging, but lower prices without increased volumes means less revenue. And the last thing imaging programs need is less revenue. So for many, imaging prices stay high. Test

    But new payer dynamics, like Anthem's site-of-service policy and Medicare's site-neutral payments, are shaking up the outpatient imaging market and prompting leaders to reconsider their pricing strategies.

    Patient price-sensitivity is a familiar challenge for imaging

    Price is an important factor in imaging's ability to capture patient market share. According to our Imaging Consumer Preferences Survey, 30% of respondents (n=2,000 imaging patients) reported that a low out-of-pocket cost was the most important factor when choosing an imaging provider. Across all demographic groups "having an out-of-pocket cost less than $30" ranked at the most important factor.

    And this trend is expected to continue, as patients take on greater financial responsibility for their health care costs. According to a 2017 Kaiser Family Foundation survey, nearly half of patients reported difficulty covering their entire deductible. Patients are not just shopping, but putting off care altogether due to costs. The same survey found that nearly a quarter of insured patients and nearly half of uninsured patients postponed or skipped recommended medical tests or treatments.

    Imaging is particularly vulnerable to price-based competition, as quality is difficult for patients to compare, low-cost alternatives exist in most markets, and non-urgent procedures allow patients time to shop.


    New payer policies increase urgency for imaging programs to address price

    On top of patient price-sensitivities, payers have taken aim at the high cost of outpatient imaging. In the private market, payers have been steering patients to lower cost sites for nearly a decade. But two new policies are changing the dynamics of outpatient imaging and prompting programs to reevaluate their pricing strategies:

    • Medicare's site-neutral payment policy: In the public space, Medicare is—albeit slowly—rolling out a site-neutral payment policy to reduce the payment discrepancy between hospital-based and freestanding imaging. Site-neutral payments requires off-campus facilities that open after November 1, 2015 to bill on a lower Medicare payment rate, currently set at just 50% of the hospital rate. This policy intensifies margin concerns of imaging programs moving into the ambulatory space.

    • Anthem's site-of-service preauthorization policy: In the private space, Anthem, the second largest insurance company in the United States, announced this summer that it will no longer pay for certain advanced imaging services performed at hospital-based sites. This increases the likelihood that hospital-based imaging programs will lose volumes to freestanding competitors.

    Develop a price competitive strategy for your market

    Whether in response to patient price-sensitivity or payer dynamics, imaging leaders are increasingly rethinking their pricing strategy. A successful pricing strategy is rooted in a comprehensive understanding of the role pricing pressures play in your market. There are three primary metrics that organizations should assess:

    1. Patient price sensitivity: How likely is it that patients will forgo care at your facility due to price?
    2. Competitor cost advantage: How susceptible are you to lower-priced competitors taking market share?
    3. Private payer steerage: How significant is volume and revenue loss due to payers steering patients to lower cost sites?

    Quantifying these three district measures of market price sensitivity enables imaging leaders to develop a strategy to address specific market challenges. Through our research, we uncovered three principled strategies to compete on price without significantly cutting revenue.

    First, organizations can provide price discounts, such as lower rates for off-peak appointments. Second, you can cut prices for specific exams, such as those with highest downstream revenue. And finally, organizations can open a lower-priced site. To help develop and implement the best pricing strategy for your organization, use the Imaging Performance Partnership's customizable tools and best practice research.



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