New Marketplace

Survey Snapshot: Is Transparency the Answer to Rising Health Care Costs?

Insights Report · March 20, 2019

Rising health care costs remain one of the top challenges facing the industry, with patient behavior often placed under the microscope in the search for solutions. While there are a number of different patient strategies for driving improvement, increasing cost transparency often tops the list.

In a survey of NEJM Catalyst Insights Council members in November 2018, for example, 71% say that the top change needed to support patients/consumers in lowering total health care costs is to provide more transparency about the true costs and quality of services. Not surprisingly, the majority of respondents (61%) also say patients lack enough information to affect the cost of their own health care–related decisions.

Patients Lack Sufficient Cost Information About Many Aspects of Health Care

From the New Marketplace Insights Report: Patients Lack Information to Reduce the Cost of Care. Click To Enlarge.

While many in the industry believe that increasing transparency is a necessary first step, there is also widespread recognition that this would only scratch the surface of what is a complex problem.

“I think it is the out-of-pocket costs that drive decisions for patients, so I don’t know that transparency alone would change things,” says Thérèse Franco, MD, SFHM, hospitalist and research fellow at the Center for Health Care Improvement Science at the Virginia Mason Medical Center in Seattle.

“There needs to be at least some change to the cost structure. This likely involves changes in provider, payer, and patient behavior. Therefore, while transparency might drive some change, and is likely necessary, it is not sufficient to affect significant change in the provision or cost of care.”

A number of structural constraints act as headwinds for controlling costs. For example, most patients are only concerned about their out-of-pocket costs, and believe there is little incentive for them to worry about the total cost of care because often someone else is paying. For providers and payers, the fee-for-service model often leads to cost inefficiencies, which is why so many in health care are looking to value-based care as a solution.

“I do not believe that more information is the answer,” says William Mayer, MD, CPE, Chief Clinical, Medical, and Quality Officer at St. Mary’s Healthcare, a member of Ascension Health in Amsterdam, New York. He says that, while increasing transparency is certainly necessary, improving health care delivery is where the industry needs to focus its cost containment efforts.

“The answer is more about changing the way health care is delivered. When the care becomes more value-based, and less defensive, the costs will take care of themselves. There is too much incentive to do more testing and care. Providers are incentivized to operate, catheterize, dialyze, and give chemo to patients. Testing and consults are ordered to protect themselves, as well. Addressing these two issues would result in significant cost savings.”

Charles Thayer, MD, Chief Medical Officer at Morton Hospital, a Steward Family hospital in Taunton, Massachusetts, agrees that structural issues beyond patient control play a role in the industry’s cost inefficiencies and also raise philosophical considerations such as whether health care is a patient’s natural right.

“The best way to control cost in any industry is to link cost directly to the purchaser,” says Thayer. “Will we do that? Unthinkable. Society has developed a concept that health care is a right. All of us will pay for health care. The cost is inescapable.”

“The more insulation there is between cost and consumer, the more inefficient the pricing is. In our system, the cost is nearly entirely insulated from the consumer. We rely on intermediaries to manage and insulate cost.”

While the industry’s structural challenges will take some time to resolve, increasing patient transparency is a relatively simple solution that, when used strategically, can offer incremental improvements to costs.

“One of the big issues for patients is the complexity involved,” says Franco. “A little bit of simplicity would go a long way.” She says that patients need more transparency around the financial implications of seeking care in the wrong settings and stresses the necessity of getting screenings such as colonoscopies and mammograms.

Perhaps the most important target for transparency initiatives is educating patients to the reality that, ultimately, they are not just responsible for out-of-pocket costs, but they are also responsible for the total cost of care that is reflected through higher insurance premiums and deductibles.

Franco says, “I don’t think the general population understands the way that delaying care and receiving more urgent care later drives up the total cost of care, ultimately increasing out-of-pocket deductibles and insurance costs. Maybe this is where transparency can play a bigger role.”

Health Care Costs - Cost Transparency Is the Main Change Needed to Support Patients in Lowering the Cost of Care

From the New Marketplace Insights Report: Patients Lack Information to Reduce the Cost of Care. Click To Enlarge.

While survey respondents say that transparency about the true cost and quality of services (71%) is the top change needed to support patients/consumers in lowering total health care costs, it’s worth noting that the second-tier responses focus on the use of incentives. These include: designing coverage models that incentivize utilization of lower-cost settings (36%), incentivizing patients to adopt health-related interventions outside of health care facilities and at home (33%), and rewarding patients who complete all recommended preventative care (27%).

Thayer says that a combination of transparency initiatives and incentives will likely work best. “Increasing transparency for patients is good and necessary, but they also need to be incentivized to choose the right behaviors.”

According to Mayer, getting rising health care costs under control will require all industry participants — patients, providers, and payers — to do their part. Not just patients.

“What it’s going to take is everybody working together and rowing in the same direction. The problem is, even if you can get health professionals engaged, how do you get the patients when many don’t have much skin in the game? There is a wide disparity in how patients pay for their care; some pay a great deal, while others pay next to nothing. This can dictate behavior.”

New call for submissions ­to NEJM Catalyst

Now inviting longform articles


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »

More From New Marketplace
Dale04_pullquote_disrupting the value-based vs fee-for-service payment model

Disrupting the Payment Model

We should modernize our payment mechanisms to reflect the reality of our digitally enabled lives.

Percentage of Patients Choosing a Reference-Based Pricing Facility for Knee or Hip Replacement Surgery - 2008-2012 - value-based benefit designs

The Evidence for High-Value Benefit Designs

Innovative models are showing promise, but limited transparency and peer-reviewed research hamper expansion.

New Evidence on Stemming Low-Value and Overprescribing - Nudgind Physicians Toward Better Prescribing Practices

New Evidence on Stemming Low-Value Prescribing

New research suggests that deploying strong and surprising messages could help to address overprescribing of opioids and other drugs.

Wang01_pullquote medical devices - medical device innovation in China

Accelerating Medical Device Innovation in China

Promoting collaboration between clinicians, researchers, device-makers, and regulators.

Many Stakeholders Share Responsibility for Lowering the Cost of Care

New Marketplace Survey: Patients Lack Information to Reduce the Cost of Care

Efforts to mitigate rising health care costs have left most industry participants — patients, providers, and payers alike — frustrated at the lack of progress. While there is plenty of blame to go around, a significant open question remains: how responsible are patients for reducing costs?

Hip or Knee OA Care Management - Musculoskeletal Institute and Bundled Payment Program at Dell Medical

Bundled Payments Are Moving Upstream

Dell Medical School at The University of Texas at Austin has improved outcomes and reduced costs for musculoskeletal care with a multidisciplinary Musculoskeletal Institute and bundled payment model.

Elements of a Sustainable Complex Care Management Contract

Sustainable Financing for Complex Care Management Is Critical to a Value-Driven Health Care System

Care management should be payer-agnostic at its core.

Comparison of Certain Model Features in Blue Cross NC Blue Premier vs Next-Generation ACO Model vs BCBSMA Alternative Quality Contract

Engineering a Rapid Shift to Value-Based Payment in North Carolina: Goals and Challenges for a Commercial ACO Program

We believe North Carolina can be a model for the nation.

Small Molecule Drugs Facing Generic Competition - Orphan and Non-Orphan Drugs - Orphan Drug Act

It’s Time to Reform the Orphan Drug Act

Three proposals for improving the law to reflect 21st-century drug development practices.

Three-Part Pricing of PCSK9 Inhibitors

A New Model for Pricing Drugs of Uncertain Efficacy

Are we paying too much for new drugs before we know how well they work? This innovative pricing model proposes postponing major rewards until efficacy is established — which could help both patients and payers while still paying back investments on the most effective drugs.


A weekly email newsletter featuring the latest actionable ideas and practical innovations from NEJM Catalyst.

Learn More »


Vertical Integration and Bold Experimentation

Four points on improving value in health care via vertical integration and aggressive experimentation.

Value Based Care

203 Articles

Disrupting the Payment Model

We should modernize our payment mechanisms to reflect the reality of our digitally enabled lives.

Medicare and Medicaid

124 Articles

“You’re Old Without Hearing Aids”— Addressing…

Hearing loss isn’t a normal consequence of aging. But it is associated with a higher…

Insights Council

Have a voice. Join other health care leaders effecting change, shaping tomorrow.

Apply Now