Price Transparency Reveals Multiple Dimensions of Healthcare Inequities Beyond Just Patients

Meade Monger

Price transparency — the much-discussed US regulations that became federal law in 2019 — has taken time to implement, but its significant side effects are now being revealed. For the first time, we are clearly seeing that inequities in our healthcare system affect not just patients, but also doctors who care for them. Research into the pricing and payments by health insurance providers indicates a clear need for changes in our healthcare payment systems.

Inequity in the U.S. healthcare has long been the focus of researchers. Individuals in poorer and more rural communities generally experience worse health outcomes than their wealthier counterparts. Although medical schools and healthcare institutions are investing resources to address some of these known inequities, the disparities faced by healthcare providers themselves have largely gone unexamined — both in research and in response to the problem.

With the healthcare price transparency regulations, researchers are gaining new insights into the issues exacerbating certain problems within our healthcare system. Initially, price transparency was promoted by advocates and policymakers as a way to empower citizens, allowing them to bring a competitive, free-market mindset to an industry long obscured by bureaucracy. The goal was to enable patients to choose providers offering the best rates. Price transparency data has become publicly available, but practical tools for patients to easily compare prices are still lacking.

Price transparency also stands to benefit doctors, who can now see the rates that other providers are paid by various insurers. In the U.S. healthcare system, each provider has unique reimbursement rates for every procedure that vary among insurance companies due to separately negotiated contracts. This is why the cost of a knee replacement surgery can differ between hospitals, and why a doctor may receive two entirely different payments for performing the same procedure on patients with two different insurance plans. 

However, accessing this data is not straightforward for either doctors or patients. Insurance companies have released vast amounts of pricing data, the scale of which can only be analyzed by data scientists.

As part of a research study, I delved into this data to understand the trends in insurance payments affecting doctors and their impact on health outcomes nationwide. My process began with analyzing trillions of individual records, illustrating why both doctors and patients find this information next to impossible for them to interpret.

Many of my findings align with what experts have observed anecdotally, but now, with price transparency, we have the data to support these observations. Some results are positive; for example, practices with higher patient service ratings tend to negotiate better rates with insurers, which supports a free-market approach to healthcare: better care, better payment

Other findings paint a different picture. Doctors receive lower payments in markets where insurance companies have strong market control (many patients in the same community use the same insurance company), making it harder for them to negotiate fair reimbursement rates. This discourages doctors from practicing in these areas, where they may not be paid adequately.

Additionally, price disparities create competitive challenges for certain providers. For instance, larger practices often receive higher reimbursement rates, making it difficult for small practices to compete. This trend helps explain why many private practices are merging with larger healthcare groups. Moreover, doctors in geographic areas where the population has poorer health are paid less than those in healthier areas, which is a troubling finding. For example, doctors in rural areas are often paid less for the same procedures than their counterparts in more centralized locations, a concerning trend given the significant physician shortage already facing rural communities.

In the U.S., community health is often linked to socioeconomic factors. Communities facing economic challenges typically have poorer health outcomes, dealing with chronic conditions like heart disease, diabetes, addiction, and cancer. In this interconnected system of health and wealth, doctors serving these communities are paid less by insurers, effectively penalizing them for working with those who most need their care.

This reality is alarming and should concern all of us. The US faces a critical shortage of healthcare providers, as the constant struggle for fair reimbursement with insurance companies drives burnout among healthcare professionals, threatening the stability of the system. When doctors are not paid adequately, they have little incentive to continue practicing, and with slow growth in reimbursement rates and the closure of rural healthcare facilities, ensuring fair compensation for all doctors is crucial to maintaining the integrity of our healthcare system.

Transparency in our healthcare system is just the beginning. Understanding healthcare pricing can empower not only patients but also doctors. Saving our healthcare system depends on it.

Meade Monger is CEO of Omniscient Platforms in Dallas.