In most markets, prices tell consumers where to go, tell sellers what competitors are charging, and tell new entrants where they can win business. Healthcare, too, often suppresses that signal until after the service is delivered. Patients are rarely given a real price before the appointment, scan, lab test or procedure. There is no real healthcare market when patients cannot compare lab, outpatient facility or physician prices before choosing where to receive care. Price transparency cannot solve emergency situations, but it is a precondition for a functioning market in routine healthcare services.
When prices are visible, providers must justify them through enhanced offerings or experience. Hospitals often have higher overhead costs than other providers, which makes routine services such as MRIs or X-rays more expensive than the same services at independent radiology centers.
Price shopping for imaging services is associated with per-service savings of up to 19 percent. When patients can shop for lower-cost care, surgery centers, outpatient clinics, and independent labs can compete with hospitals and larger providers on convenience, quality and price.
Many prices are already supposed to be available to patients under the Hospital Price Transparency Rule and executive orders issued in 2019 and 2025. The rule and first executive order directed Health and Human Services to establish hospital price transparency requirements, and the resulting rule required hospitals to provide standard charge information for common shoppable services in a patient-friendly manner. The 2025 executive order attempted to strengthen enforcement of existing price transparency rules and require hospitals to provide actual prices rather than estimates.
Unfortunately, compliance has been minimal. As of November 2024, one review found that only 21 percent of hospitals complied with the Hospital Price Transparency Rule. That was down from the peak in July 2023, when 36 percent of hospitals were fully compliant. At best, barely more than one-third of sampled hospitals met federal price transparency standards.
For large hospitals and health systems, the financial benefit of keeping prices opaque can exceed the cost of noncompliance. The maximum penalty is $6,277 per day for a large hospital, defined as one with more than 550 beds. This amounts to just over $2.2 million yearly. That may sound like a lot until you compare it with the billions of dollars many hospitals collect from patients annually. Toothless penalties cannot incentivize hospitals to make prices visible, even if they are regularly applied, which they are not. As of April 2023, the Centers for Medicare & Medicaid Services had issued nearly 1,000 warning notices and requests for corrective action plans, but only four civil monetary penalties. When the penalty is largely for show and is rarely enforced, hospitals have little reason to give patients real prices.
That is just hospitals. Federal law does not impose a hospital-style public price-posting requirement directly on most non-hospital providers such as doctors’ offices, imaging centers, labs, urgent care clinics, or ambulatory surgical centers, even though they often provide the services. The federal direct posting regime remains centered on hospitals. Patients need to know hospital prices, but they also need to know what other providers charge to make real comparisons. Even if federal rules were fully enforced, they would not give patients all the information they need.
The solution is to make price transparency a real requirement. Penalties should be tied to hospital revenue so large health systems cannot treat noncompliance as a rounding error. Price transparency requirements should also apply to non-hospital providers, including doctors’ offices, imaging centers, labs, urgent care clinics, ambulatory surgical centers and physical therapy providers.
Price transparency will not fix every distortion in healthcare, but without it, no serious market reform can work. Patients cannot shop, lower-cost providers cannot compete, and overpriced hospitals cannot be pressured to justify their rates when the price is hidden until the bill arrives. Regulators need to make sure patients can see the price before they buy it. A healthcare market without prices is not a free market. It is a billing system designed to protect incumbents from competition.
Reprinted with Permission from DC Journal - By Justin Leventhal
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