The expectation to increase revenue and maintain sustainable profit margins is a constant drum for most health systems. Balancing the need for sustainable margins with the challenges of navigating complex payer contracts and regulatory demands is no easy feat. 

As health systems grapple with increasing pressure from payers, challenges in collecting and analyzing payer-negotiated rate data, and limited benchmarking capabilities, price transparency data emerges as a crucial tool for driving informed decisions and boosting revenue growth.  

Notably, a recent analysis shows that 91% of hospitals are now posting machine-readable price transparency data, underscoring the growing adoption of transparency practices to enhance operational and financial performance. 

From helping to close gaps in reimbursement benchmarking data to identifying opportunities to boost underperforming service lines and enhance competitive positioning, health systems can use competitive intelligence via price transparency data to identify opportunities for margin improvement, thus making the business more sustainable. 

Addressing reimbursement pressure with price transparency data

There is always some level of friction when it comes to reimbursement rates. As health systems look for ways to expand access to care and attract new patients while retaining existing ones, they have at the same time seen an increase in claims denials and pressure from payers to accept lower reimbursement rates, which erodes margins. 

Writing in a blog post, Rick Pollack, president and CEO of the American Hospital Association, said commercial insurer practices are causing hospitals and health systems to dedicate more resources to administrative tasks like challenging denials, stating that “care denials were up 20.2% for commercial claims and 55.7% for Medicare Advantage claims from 2022 to 2023, which placed a burden on hospital revenue cycles.” 

But providers aren’t without tools to help overcome reimbursement pressure and hurdles. Price transparency data provides health systems with a clear view of how their payer-negotiated rates compare to local and national benchmarks. 

It is much easier to challenge low rates or denials when there is benchmarking data that enables easy identification of rates that are low or claims that are incorrectly denied.  By analyzing payer-negotiated rates through publicly available price transparency data, health system leaders can strategically identify discrepancies in reimbursement rates compared to local and national benchmarks.  

Armed with this insight, health systems are better positioned to negotiate more favorable contracts with payers. This also helps ensure that rates accurately reflect the value of care provided and protect revenue margins.

Identifying underperforming service lines with price transparency data

Health systems are always walking a tightrope between meeting the evolving needs of their patient populations and maintaining profit margins. Some outpatient services, specialized services for rare or severe disease states, new therapies and services, and ongoing challenges of accommodating value-based care can often leave health systems on their heels when attempting to optimize service lines.  

Without price transparency data, health systems may unknowingly offer services with slim or non-existent profit margins due to unfavorable reimbursement structures. 

Health systems cannot make strategic decisions that position them favorably in a competitive market without understanding what those competitors are offering. If there is uncertainty around whether to offer certain services or how much to charge for those services, price transparency data provides the needed insight into how competitors are charging for those service lines, allowing health plans leaders to effectively benchmark both their offerings and costs.  

By pinpointing service areas where their system’s rates fall significantly below the local or national average, health systems can prioritize renegotiations or adjust service offerings to align with strategic financial goals.

Enhancing competitive positioning with price transparency data 

More than ever before, patients are taking financial responsibility for their care, and more than ever hospitals and health systems are obligated to be transparent about the cost of that care or risk losing out on patients seeking more information and a better experience. But without clear insights into competitor pricing, health systems struggle to position themselves effectively within their market.  

If health systems are unsure of what their patient population needs or how much they are willing to pay for services, then they will fail to remain competitive among those health systems that are leveraging price transparency data effectively. 

However, health systems can enhance their competitive positioning by leveraging price transparency data, which helps them better understand how their payer-negotiated rates compare to those of nearby competitors. When providers know where they stand among other health systems offering similar services, they can then strategically adjust their pricing to bolster their market competitiveness, attract more patients, and drive revenue growth.

Strengthening strategic negotiations 

For health systems to optimize their network and establish stronger partnerships and collaboration with payers, they must be able to see the full picture of the market. But health systems often enter payer contract negotiations without a comprehensive view of market dynamics.  

This creates a significant disadvantage and limits any leverage to negotiate. But making use of price transparency data allows health systems to make informed decisions and, when done effectively, can offer a distinct advantage. 

When health systems effectively analyze transparency data, it helps them identify objective benchmarks that they can use to support their case during contract negotiations, and they can push for reimbursement rates that align with market standards.  

This not only strengthens their negotiating power, but it also leads to stronger margins and ultimately a more sustainable financial outlook.
 

Overcoming data utilization barriers in price transparency efforts

Although health systems often have price transparency data available to them in various formats, many continue to face challenges in aggregating, interpreting, and applying this information effectively. Fragmented and siloed data, inaccurate or incomplete data, and inadequate data governance can all present barriers to effectively using data.  

Robust data analytics solutions allow health system leaders to strategically transform complex price transparency data into actionable insights. With a comprehensive plan for data utilization, health systems can make better decisions when faced with pressure from payers because they will be better positioned to proactively identify opportunities to optimize payer mix and margin performance.

Maintaining margins in today’s healthcare market is not an easy task. From changing regulations and standards to evolving patient expectations, health systems must leverage all the cards in their hand to ensure revenue growth and patient satisfaction. Competitive intelligence, when augmented by price transparency data, is a powerful tool. By analyzing payer-negotiated rates and benchmarking against competitors, health systems can identify areas for revenue growth and margin improvement. 

To stay competitive and financially resilient, health systems must prioritize the adoption of robust data analytics solutions. By integrating price transparency insights into their strategic decision-making processes, health systems can navigate the complexities of payer negotiations and regulatory demands while positioning themselves for sustainable financial growth.