The Healthcare Sector, in India, generally has an opaque pricing structure resulting in ambiguity on the financial commitments one must undertake. To some extent, this criticism is justified.

In most hospitals, this ambiguity is exacerbated due to complex billing cycles or procedures, multiple dimensions of coverage in insurance plans from patients, forced deductibles, exclusions, opaque aid programs from the government, etc.

From a patient’s perspective, this challenge in pricing transparency must be solved at all costs. And the industry is taking note of their concerns as well.

Driven at least partly by insistent nudges from the Indian central government, there is an increasing push in the healthcare sector to follow a standardised pricing regime for every medical workflow undertaken in care delivery. The feeling is that this will help in creating a simple and efficient medical pricing and billing system that patients can easily understand so they can make better and more informed choices about their treatment. Newer entrants in the healthcare space will certainly try to differentiate themselves from established names by offering a more transparent standardised pricing regime for treatments. The assessment is that patients will find this method attractive and easy to follow.

Standardised pricing is clearly an idea whose time has come. But are healthcare providers ready?

Sadly, the reality is that most players in the healthcare sector are yet to be fully aware of the obstacles they will face once standardised pricing becomes the norm in the industry.

Here are the 4 key obstacles healthcare providers are likely to face once standardised pricing becomes a norm in the sector.

4 challenges for healthcare providers in the era of standardised pricing

Pricing ambiguity for patients

The number one challenge will be helping patients to make more informed choices in their treatment plans. This would require a transparent pricing model that only bills patients for the inputs that go into delivering the services they consume. However, traditional operational and financial models that healthcare providers follow don’t necessarily reflect this reality of patient-centricity. They instead tie pricing to the revenue and expenditure patterns from time to time. Such approaches will fail miserably when the industry shifts to standardised pricing norms because any deviations or unjustified elements will become immediately visible.

Negotiating vendor contracts

From insurance vendors to pharma supplies, a range of businesses work as vendors to a healthcare provider. One of the major areas of negotiation that hospitals and healthcare facilities use while establishing their vendor contracts is economy of scale. In simple terms, the facility guarantees a steady flow of consumers of the products offered by the vendors and in return, a bulk discount is offered to the facility by vendors. However, when price standardisation kicks in, healthcare providers may have a hard time adjusting their operational workflows to suit an appropriate pricing scheme for a treatment.

Behind the scenes, they will have to find new ways to negotiate contracts that ensure a balance between care affordability and vendor profitability. At the same time, the healthcare provider too needs their fair share of revenue sustainability to stay competitive.

Product costing inefficiencies

When we speak about healthcare products, it could be medical devices, the services offered in a treatment workflow, or a bundle of treatment options tied together to solve a patient’s condition. The true cost incurred by the care provider depends on a range of factors including supplier rates, medical practitioner fees, operational and billing costs, and much more. When standardised pricing becomes a key market need, it will be difficult for care providers to align costs with pricing unless they have clear visibility into all the factors that add up to the cost and an understanding of how each microelement influences the total cost.

Regulatory compliance on pricing

The Indian Supreme Court is coming around to the thinking that the right to affordable and effective care feeds into the fundamental right to life and personal liberty as guaranteed by Article 21 of the Constitution. That’s why, with rising healthcare costs, inevitably, the central government looks set to mandate more transparency in the pricing schemes offered by care providers. Hospital pricing will be subject to strict audits with industry-standard reference models. Unless organizations rationalize pricing workflows to meet standardisation norms, they will fall foul of government bodies and regulators.

Overcoming the pricing dilemma

Balancing costing and pricing will always be an art financial heads in a hospital or healthcare facility must master to succeed. Patient treatment costs encountered in each visit or admission must be tied to the most profitable internal costing flow.

The right partnership guarantees success

Getting deeper into the realms of costing and pricing and experimenting with approaches like ABC requires a more strategic roadmap and technology foundation. This is where healthcare providers need a technology partner like Proactive Solutech to build the most profitable care delivery routines for all stakeholders. Get in touch with us to know more.