There is growing interest among specialty providers—and even some hospitals—in marketing services directly to patients by using transparent pricing and a cash-pay business model, Lydia Ramsey reports for Business Insider.
An overarching trend
Ramsey notes that a similar shift has already been reported among primary care providers (PCPs): Instead of accepting insurance for routine visits and medications, some PCPs are charging patients a monthly membership fee to cover most of the visits and drugs that the average patient might need.
Now, some hospitals and specialists, including oncologists and physical therapists, are picking up on the trend—with a few modifications.
Instead of the monthly fee, these specialists and hospitals are offering "cash prices" for certain services and procedures marketed directly to patients. Under the these cash-pay models, patients can log on to a provider's website and find out exactly how much they would be expected to pay out-of-pocket, no insurers involved. And while some of these cash-pay providers no longer work with insurers at all, most of them still provide insured services in addition to their cash-pay options.
According to a tally from the Free Market Medical Association (FMMA), 67 providers—including surgical centers, imaging centers, and physical therapy practices—disclose their pricing as part of this "free market" model. And the numbers are growing: FMMA Executive Director Meg Freedman said she adds about nine to 10 providers to her group's search function each month.
Is it more affordable?
In some circumstances, the cash-pay setup can be more profitable for providers while also being more affordable for patients. To illustrate this point, Ramsey highlights the story of Cheryl Millican, an uninsured patient who had a hysterectomy at the Surgery Center of Oklahoma, which operates under the cash-pay model.
Before Millican learned about the center, her Dallas-based doctor had told her the procedure would cost about $38,000 out-of-pocket. However, Millican later learned from a friend that the center would do it for about $8,000 out-of-pocket.
When Millican asked the doctor who performed the procedure why he did it for the lower price, he told her that the setup was actually more profitable for him. He explained that he would have received about $500 for doing the procedure under an agreement with an insurer but makes about five times that under a cash-pay setup.
But there are drawbacks, Ramsey writes. While cash-pay can be more cost effective, Ramsey points out that the pricing can still be too high for many patients and that shopping around for services is not an option when patients need emergency surgery.
Nevertheless, Ramsey notes that "cash-pay providers are gaining traction with self-insured employers," for whom the cash-pay setup can be more effective than the traditional insurance payment configuration. For instance, Freedman shared a case in which an employer paid for an employee with breast cancer to receive a mastectomy, chemotherapy, and reconstructive surgery at cash prices because it was the lowest-cost option.
What's to come?
Currently, providers who do not take insurance are "in the minority in the United States," Ramsey writes. However, she adds that "the movement appears to be growing" And that with high-deductible plans becoming increasingly popular, the movement of transparency, cash-pay pricing "may continue to grow" (Ramsey, Business Insider, 4/8).
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Leslie Schreiber, Managing Director
As high-deductible health plans (HDHPs) become increasingly common, more patients are comparison shopping for health care. In fact, Advisory Board research found that 56% of Americans now actively look for pricing information before getting care.
Join Advisory Board's price transparency and consumer pricing strategy expert, Leslie Schreiber, on April 19 as she debunks common myths about patients and hospital pricing to help your organization prepare for the rise of consumerism.
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