Surprising benefits of price transparency and how to utilize them

You need to start thinking like a plastic surgeon.

The days of being a doctor or outpatient facility and passively waiting for referrals is waning. As patient networks narrow and deductibles grow, the mindset of the consumer is changing. They're beginning to understand that sometimes costs are lower even if they disregard their network and find an equally qualified provider.

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Because the consumer is paying out of pocket, sometimes $5,000 or more before the deductible is met, they recognize they have a choice in how to spend their healthcare dollars. And if patients are choosing and not being told where to go, you as a doctor or other outpatient provider must think like a plastic surgeon-a physician that has long been part of the free market healthcare system.

Plastic surgeons that offer cosmetic services are paid out of pocket because insurance does not cover such non-medically necessary services. Focusing on customer growth and retention without the support of a built-in referral system from insurance networks and the like is the cosmetic plastic surgeon's forte.

As more patients recognize they will be paying for a portion of their healthcare out of pocket, regardless of whether it's medically necessary before a deductible is met or because it's cosmetic, so too will doctors need to market to that new type of patient. And what do patients that are paying out of pocket want? They want to know the cost up front. Enter price transparency.

Don't fear the concept of price transparency

This recent article in Medical Economics discussed some of the perils of providing price lists to patients. A list of healthcare services, along with the prices listed as a static menu, may not be the best approach as alluded to in the article. But that doesn't mean price transparency as a concept is wrong. It's certainly reasonable for consumers to know what they're paying up front or certainly a very close approximation that includes actionable information.

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By actionable information, I mean that the price quotes provided should not be U.S. averages or an amalgam of claims data. When you go to purchase a car, a quote from the dealer, while not necessarily exact, should be a reflection of what you will pay.

In contrast, claims data or the insurance companies' negotiated rate isn't always what the patient pays. Not even close. Negotiated rates vary across policies, companies and insurance plans. They can vary widely and do not provide the patient with useful, actionable information of what they may pay out of pocket.

Therefore, the doctor or facility must have a fee schedule that reflects a "prompt pay" discount or the fee charged when a patient is not using their insurance or before their deductible is met. Once prices reflect what a patient will actually pay without surprise bills or hidden charges, then the provider is now giving the consumer a reason to use their facility. In this context, price transparency is a marketing tool. Something plastic surgeons, and many other providers already do. But simply listing your prices is not the answer.

How to use price transparency as a marketing and lead generation tool

In my plastic surgery practice, I don't use a static list of procedures and prices on my website. If I did, consumers would look at the prices and move on. I wouldn't know who visited my site. In other words, I would be "giving the milk away for free." Instead, I use a price estimator that allows the consumer to add procedures-of-interest to a "wishlist."

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They don't see the prices up front. In fact, they don't see the prices until they submit their wishlist along with their contact information, including name, email address, phone number and ZIP code. Once the wishlist is submitted, the consumer automatically and instantly receives a breakdown of costs in an email.

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At the same time, my front office staff receives the same email with the consumer's contact info for follow-up. With this price estimator, we have provided the consumer with the instant gratification of receiving pricing information immediately, balanced with my practice's need to build and maintain new patient relationships.

And for those of you thinking this can only work with cosmetic plastic surgery, take a look at this dermatologist’s price estimator. It doesn’t only work for providers in the cosmetic realm. There are many facilities, including this ASC, that offer bundled pricing and use a price estimator to share cost estimates with consumers in return for their contact info.

In addition to pricing for individual providers and facilities, physician trade organizations are considering using a price estimator as a lead generator for their members. Take for example, the American Society of Plastic Surgeons ‘Find A Surgeon’ directory. The consumer, looking for a board certified plastic surgeon, can also determine that doctor’s pricing through the ASPS website.

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Even if your facility accepts insurance, you don't know the insurance coverage of every patient visiting your site. You can't make assumptions about how adequate or inadequate their insurance coverage is. So, if you allow any consumer to check pricing after they provide their contact info, you've generated a lead for follow-up. Once you have the patient's contact info, regardless of how they're paying, you can help navigate them through your facility. You've captured them!

Follow up, remarketing and eCommerce

But it doesn't end there. Aside from your office staff following up with each lead, you can add their contact info to your database. Remarketing can take many forms. Either through Google Adwords or other outreach efforts, but monthly email newsletters are a very effective type of remarketing.

With each patient submitting wishlists though your site to check pricing, this is a great way to passively build a database of potential self-pay patients. Each month, an email newsletter can address a different topic: colon cancer screening, wellness visits, immunizations, anterior approach total hip replacement, etc. You know this cohort of consumers are interested in your services because they've already visited your site and submitted a wishlist to check pricing.

By making them aware of all services you have to offer, you potentially remind them (or a family member) of something they need or have been considering. And if they have a high deductible, you will benefit from short term cash flow when they pay out of pocket but also potentially long term cash flow from insurance reimbursement once they meet their deductible.

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Another way we remarket to these patients who submit a wishlist of procedures is to give them the opportunity to purchase non-surgical services through the price estimator on our site. If you consider the situation, it's not such a huge mental leap for a patient who is checking pricing to then be able to purchase that particular service online. In yet another example of creating a marketing edge for your practice, similar to online appointment booking, online purchases of non-surgical services like labs, MRI’s, X-rays, BOTOX® Cosmetic, fillers, post massive weight loss supplements, while non-traditional, is not so unreasonable.

Next: Benefits to your front office staff

What's critical to understand is you want to capture the contact information of the visitors to your site but you also want to find a way to keep them engaged, whether it be through email newsletters or opportunities to purchase online.

Benefits to your front office staff

Regardless of whether you are a solo practitioner or a larger facility, consumers are calling and asking about the costs of your services. In my practice, up to 83% of all calls are related to cost. Over 90% of all submissions through our generic website submission form are about cost. If my office staff didn't have an automated price estimator to direct these patients to, they would be on long phone calls and manually responding to thousands of emails answering questions about price. With an automated way to answer pricing inquiries, your front office staff will be free to work on other more pressing tasks.

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Additionally, providing price estimates that generate a lead is a form of documentation. So rather than run the risk of the front office staff quoting the wrong amount or not including all ancillary fees (OR, anesthesia, implant costs), an instantly generated quote through your website provides evidence of accurate pricing information and the disclosure that they are indeed estimates.

Statistical analysis: How well does lead generation and price transparency work

So how well does it work?

As detailed in this peer-reviewed journal article, we conducted a study in my practice over the course of one year. In that first year, without any additional marketing, we received 412 wishlists from 208 unique leads. 17.8% of those submitting wishlists came in for a consultation and 62% of those consultations resulted in booked procedures.

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Even though 82.2% of consumers that submitted a wishlist did not come in for a consultation, our office still collected their contact information and added it to our email database. With 12 additional touch points throughout the year via each monthly email newsletter, we had an additional 2.8% of those patients come in for a consultation in the subsequent year and all of them booked a procedure!

The difference between consults with price-aware patients and non-price aware patients was significant. We found that price-aware patients were 41% more likely to book a procedure after their initial consultation because they knew the approximate cost ahead of time and were less likely to experience sticker shock.

Next: It's not too late to think like a plastic surgeon

It's not too late to think like a plastic surgeon

There is no stronger incentive for a visitor to your website to provide their contact info than the promise of pricing information. In fact, there is no other way for someone to determine how much you charge for a specific procedure from your facility unless you tell them. Therefore, you have something they want and there's nothing wrong with exchanging your facility pricing for their contact information.

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Additionally, even if the patient receives treatment from an in or out-of-network facility and even if they pay the same or less than a negotiated rate (the out-of-pocket "prompt pay" discount is invariably less than the negotiated insurance rate), they can still submit their receipt to their insurance company. So it still counts toward their deductible. If each out-of-pocket payment is less than the negotiated rate, then it will take longer for the patient to meet their deductible (and overall they will be spending less). If it takes longer to meet the deductible, then the insurance company is less likely to pay out a benefit.

In other words, if you think and market like a plastic surgeon and combine price transparency with lead generation, you win, the patient wins and the insurance company wins. Granted the welfare of the insurance company may not be first and foremost in our minds, but a free market system will work better if everyone wins.

Jonathan Kaplan, MD, is a board-certified plastic surgeon based in San Francisco, California, and founder/CEO of BuildMyBod Health, an online marketplace for healthcare services that allows consumers to determine cost on out-of-pocket procedures, purchase non-surgical services and in exchange, the healthcare providers receive consumer contact info-a lead, for follow up. Currently, the BuildMyBod Health database consists of over 250 and growing board-certified plastic surgeons, dermatologists, primary care, dentists, Ob/Gyns, medspas, surgery centers and other health care providers that believe in price transparency.