Whether you’re buying a new pair of socks, a used car, or a flight to Paris, you expect to be able to shop around. The ability to compare options before making a purchase could be considered the right of the modern consumer. Most industries have had no choice but to embrace a more informed, more empowered consumer—one who has more information at their fingertips than ever before.
The health care industry has, until recently, been excused from this demand for price transparency, leaving patients at the mercy of a confusing, unpredictable, outdated, and expensive system. Chris Severn, founder of Turquoise Health, explains the unique challenges associated with increasing price transparency in health care.
THE PUSH FOR TRANSPARENCY
The demand from consumers for pricing transparency in health care isn’t new, but the need for providers and payers to comply is, as Severn explains.
The challenge itself is fascinating. For one thing, the economics of health care are controlled by contract agreements that live on scanned PDFs and scattered fee schedules. Many haven’t changed since the ‘90s and have never faced the scrutiny of consumer transparency.
Regulatory changes forced the hands of health care providers. The Hospital Price Transparency rule took effect Jan. 1,
2021, requiring all hospitals in the U.S. to publicly disclose their payer-negotiated payment rates. The rule also requires hospitals to provide a tool that allows consumers to search and view the prices of 300 shoppable medical services. Hospitals that don’t comply face a penalty of up to $300 a day, and penalties are expected to increase over time.
Providers (and starting in 2022, payers) have no choice but to increase the transparency around their rates. This doesn’t have to be a bad thing for them, Severn says.
The new regulations represent an opportunity, as Turquoise Health sees it, to get providers and payers to buy in and see the value of empowering patients to be rational consumers of health care. Providers and payers can view price transparency as a competitive advantage, not a regulatory burden.
It’s a challenge that the young, venture-funded company (with a total of $5.3 million raised between two rounds) is uniquely positioned to address.
HUNGRY FOR DATA
Severn created Turquoise to be the solution for health care price confusion. “We’re building software to enable price transparency.”
Turquoise guides providers and payers to simpler agreements, resulting in clearer prices. (Payer, in this instance, refers to any entity that purchases health care on behalf of groups—insurance companies, co-ops, and employers that buy health care on behalf of their employees.)
The company’s website (Turquoise.health) shows a glimpse into the future when every provider and payer website will need to have the capabilities that Turquoise Health enables.
It’s a tall order. Building the software is, in theory, the easy part. To facilitate price transparency, Turquoise needs data—data that, until the new regulations came into effect, was not readily available. And although thousands of hospitals have since released their transaction data to comply with regulations, it’s not necessarily presented in a consumer-friendly format.
Severn describes the health care landscape as a muddy river, dirtied by inaccurate, incomplete, or unavailable data. Cleaning up the river requires accuracy and transparency at the source—from providers and payers. When hospitals began releasing batches of this data in early 2021, the Turquoise team set out to scour the internet and turn the data they found into something useful.
Severn instructed the team to think of this process like a video game, where each new data source was a level to unlock and beat. So far, the team has aggregated data from more than 3,100 hospitals and counting—enough to launch the beta version of their website, which anyone can use to find and compare prices of health care services in their area.
Later this year, the team looks forward to what Severn describes as “the biggest thing happening in health care that no one knows about,” when payers will also be required to release their pricing data.
With each new data set, the team gets closer to being able to offer what Severn calls a “... full fidelity shopping experience."
A BLUE OCEAN
The opportunity is immense—but surprisingly, the competition in this space has not been. A few widely used electronic health record, or EHR, solutions have shown signs of wanting to enter the transparency data space but are limited by their existing relationships with providers and payers. “They can’t risk alienating their customers,” Severn says.
A large EHR tool with long-standing relationships with hospitals and payers isn’t exactly incentivized to broadcast transparency data that might put their customers at risk.
But someone has to do it: Hospitals and insurance companies have no choice but to comply with new regulations. In the short-term, they risk having to pay fines, but soon, simply complying with the legal requirements won’t be enough. As price transparency becomes the norm in health care, patients will demand better, more user-friendly experiences. Price transparency, but even more broadly, value transparency (where patients can consider access to and quality of health care in addition to price) will be the standard.
And so, providers and payers face a critical choice: Turn value transparency into a competitive advantage or face the consequences. Whether they are ready or not, providers and payers are entering a race to offer the most transparent, user-friendly patient experience.
Turquoise Health is ready to help them compete. “We welcome them all,” Severn says.
“It’s like being invited to a wedding that you don’t want to go to,” he says with a laugh. “These hospitals and insurers know they have to come to the party … so they might as well find a way to make it enjoyable.”
There are several ways that Turquoise Health is currently working with its B2B customers to help them comply with and embrace the new regulations. One large revenue source for the company is the data they have painstakingly collected. Turquoise offers “... one of the biggest data sets of cleaned up, structured hospital rate data,” Severn says. Providers use this data to gain a better understanding of how to compete with those around them.
The company also sells a white labeled version of its software to providers and payers to use on their own websites. Hospitals can become fully compliant with transparency regulations while offering patients a simple browsing experience. Non-hospital providers can also list cash rates for services and become a Turquoise-verified provider.
Turquoise is also launching another product soon: a rate negotiation platform to help providers and payers act on and renegotiate pricing data. This will help payers meet compliance requirements, and drive value-based care decisions for members.
Turquoise Health’s vision is to make shopping for health care as simple as buying a plane ticket is today—so that consumers of health care know exactly what they are getting, how much it will cost, and what their options are before they step foot in a provider’s office.
The company’s vision is a not-so-distant future where prices have menu-like clarity at a fair market rate. It’s a shift that will take time, but it is happening. And Severn and the Turquoise Health team are ready for it.