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Healthcare: Can Fixed price Model help?

Healthcare: Can Fixed price Model help?

I was just going through an article about how the relationship between value and pricing has improved over last few decade. Healthcare pricing, though, is different from other goods and services, but the relationship between pricing and value does exist in this sector as well.

Value is created when there is correlation between what we pay and what we get. That value is based on pre informed decision. Any decision of payment which is bulldozed on patient on account on contingencies, reduces the value of the services provided and in turn reduces the Willing to Pay (WTP) of the patient and customer.

When a patient comes to hospital, lot of questions and concerns are in his mind. Main concern of the patient though is to get well as soon as possible but the other concern that lies on the back of the mind is about the expenses and more so due to ambiguity in expenses. Patient many of the times do not feel value in the price he needs to pay at the end, and the reason many of the times is lack of anticipation of what he needs to pay.

When we purchase a product from a shop, we exactly know what it will cost to us and that makes our choices easy. At the end we feel satisfied or at least responsible for our decision to purchase. In healthcare we never know what we are going to pay when we end up at the hospital. This creates apprehensions, distrust and poor troubles during the course of clinical management.

Not just for patient this is also a concern for the Clinician as well. Doctors have to see the pricing of the tests a lot many times before actually advising it and the decision to conduct a test or a particular treatment solely do not lie on clinical knowledge but on financial as well.

Ayushman Bharat, for example, has done excellent homework in brining down this ambiguity of pricing. Though I may not agree with the amount of that pricing that has been set but the methodology that has been used can further be extended for patients in private practice to remove existing ambiguity in medical and health operations.

Government has fixed pricing of COVID patients and that has helped a lot to patients as well as the industry in having a clear understanding of what patient needs to pay for the treatment. This can be applied to all patients as well.

The new methodology of Fixed pricing can accommodate most of the tests, treatments and other expenses of the hospital in a clear per day pricing. Additional tests, treatments and procedures can though be further added after prior approval of the patient. Patients needs to be pre-informed as to what would be the cost of treatment per day. This shall improve apprehensions and generate trust among patients. Also, this shall ensure that clinical decisions are taken more on the basis clinical information and not on financial information.