The Relationship Between Hospital Price Transparency and Hospital Revenue

hospital staff

Hospitals that fail to comply with price transparency rules face penalties from CMS. However, researchers and analysts using these data must pay attention to the need for more standardization in machine-readable files.

To meet the requirements, hospitals must provide price information in two formats: a consumer-friendly list of 300 shoppable services and a comprehensive machine-readable file. Meeting these standards can be challenging for hospitals, leading them to seek help from third-party vendors.

Disparities In Quality Of Care

Since 2021, hospitals have been required to post standard charges for their services and negotiate the rates they receive from health plans. This information is critical to consumers shopping for the best care price.

However, the complexity of hospital pricing and rate negotiations makes interpreting these data challenging. In addition, the format of these machine-readable files can skew statistics when used to compare rates across hospitals or locations. This problem may have been exacerbated by the fact that hospitals need to be uniform in their approach to compliance with the transparency rule.

This has led to a wide range of erroneous claims about national compliance rates, ranging from as low as 6% to as high as 60%. In response, CMS explores how to drive standardized hospital price transparency information reporting. It is also working with third parties to develop tools to make this information more useful for consumers.

Cost-Cutting Pressures

Hospitals face mounting scrutiny for perceived non-compliance with a Federal rule requiring them to post standard charges and negotiated rates online. They argue they must do so because patients need the information to shop for care and make informed decisions. But here is a lot of speculation about how hospitals increase revenue

Many hospitals face financial pressures that can lead to closures and acquisitions. Overhead expenses are a major contributor to these pressures and can result in negative margins. While some overhead expenses are unavoidable, those that can be cut can help hospitals compete more effectively in the market. This is why an effective RCM (revenue cycle management) system is needed to ensure positive cash flow and optimise financial performance.

Unfortunately, the data hospitals must release is only sometimes user-friendly or easy to understand. For example, hospitals’ machine-readable files can be difficult to navigate and do not reflect a comprehensive view of a patient’s out-of-pocket costs. This lack of standardization could skew the research results and impact how consumers use the information to compare prices.

Uninsured Patients

Patients have a right to know what healthcare procedures cost and should be able to make informed decisions about their care. This has only sometimes been the case in the U.S. healthcare system, where hospitals can hide prices and other information from policymakers and researchers. This has contributed to unfair pricing practices and the lack of competition in healthcare markets.

Hospitals have worked hard to comply with price transparency requirements, but it has been challenging. They face significant challenges with interpreting and presenting the data, and many of these challenges are outside their control.

For example, patient-focused websites often display multiple costs for a single service, and different data formats can confuse analysts. In addition, hospitals need help with the financial impact of uninsured patients. According to a new study, these patients generate over 80 percent of self-pay revenue. If hospitals are not optimizing their revenue cycle, they could miss millions of dollars in potential profits.


Over two years after hospital price transparency regulations were introduced, many hospitals still need to comply. The main reason is that hospitals aren’t incentivized to disclose their prices. Furthermore, the information disclosed by hospitals may give a partial picture. For example, the negotiated rate files do not include patient-facing fees such as co-pays and deductibles. In addition, hospitals often exclude services bundled into procedures, preventing patients from comparing prices.

The new rules require hospitals to release standard charges and negotiated rates in a consumer-friendly format. However, compliance could be faster. Some hospitals refuse to comply, even when their revenue could be impacted. Others are hesitant to release their pricing information, fearing they’ll be unable to attract consumers or drive volume. This can put them at a disadvantage to more nimble competitors.


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About Marc Wallace

I'm never too busy to share my passion. I've created this page to help people learn more about business, finance and real estate. Besides all the serious stuff, I'm also a man that values family and healthy relationships. I hope you find my content insightful.

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