Price shopping for clinical laboratories and other healthcare services and surgical procedures creates a ‘healthy competitive environment,’ an Optum executive noted

With the threat of infection from SARS-CoV-2 (the coronavirus that causes COVID-19) on the minds of most Americans, price transparency for medical care is more critical than ever, and new smartphone applications (apps) are helping patients shop for the best prices and quality when selecting healthcare, including clinical laboratory services. 

One example, SmartShopper by Vitals (now known as Sapphire Digital) of Lyndhurst, N.J., is a pre-paid employer- or health plan-based program that lets people use mobile phone apps and go online using their computers to check prices and quality ratings for healthcare service providers in their area. The program may also incentivize members to prices shop by offering up to $500 per service for choosing lower-cost providers. 

“Today, there is no reason consumers shouldn’t know the price of routine, non-emergency care,” said Heyward Donigan, former President and CEO of Vitals who is now CEO of Rite Aid (NYSE:RAD), in a news release. “Putting consumers in the driver’s seat for making informed healthcare decisions will create a competitive healthcare marketplace that ultimately lowers costs for everyone.”

Does Price Shopping Create a ‘Healthy Competitive Environment’?

Individuals whose health plans or employers have signed up for SmartShopper can use it to seek out the best prices for routine exams, preventative exams, imaging scans, and to schedule surgeries. The program’s provider data is compared by cost and quality based on nationally recognized metrics and patient reviews.

Some of the largest health insurers in the country, such as Anthem and Highmark, provide price shopping tools to their clients. 

“Up to 7% of overall healthcare spent could be reduced through price transparency tools like SmartShopper,” Becca Lococo, PhD, Vice President, Customer Experience at Optum, told Modern Healthcare. This can create a really healthy competitive environment in an industry where costs are already rising.”

Employers Save Big with Price Shopping

Large companies can reap substantial savings when they provide their employees with price shopping tools. Employer savings can range from $1,810 for a round of physical therapy to $80 for a mammogram. Patients, on average, save $606 for each procedure with SmartShopper, reported Modern Healthcare.  

“Even just one person shopping can make a difference for that employer in terms of the claims they’d be paying out at the end,” Steve Crist, Vice President, Commercial Health Plan, Blue Cross Blue Shield of North Carolina, told Modern Healthcare. “Even though the employer is paying the incentive, the cost savings more than make up for it. The ROI on this program is very strong.”

The Vitals SmartShopper Book of Business Report 2017 notes that, between 2014 and 2017, the tool saved employers $40 million and paid out $4.6 million in cash rewards to individual consumers. In 2016 alone, SmartShopper saved employers $15 million and paid out $1.8 million in cash incentives with the average incentive check totaling $85.

The Vitals report also listed the top 10 procedures and the three-year total cost savings for employers that used SmartShopper. The list includes clinical laboratory testing as the fifth largest source of savings for employers that used price-transparency tools as part of their health benefits programs:

  • Colonoscopy ($6,592,719)
  • MRI ($5,382,440)
  • Physical therapy ($4,545,758)
  • Remicade therapy ($4,364,887)
  • Lab and blood work ($3,600,105);
  • CT scan ($2,001,602)
  • Upper GI endoscopy ($1,301,916)
  • Knee Surgery ($913,436)
  • Mammogram ($868,322)
  • Shoulder Surgery ($636,615)

SmartShopper has a configurable list of more than 200 medical procedures and services included in the tool. Sapphire Digital (formerly Vitals) uses claims data and collaborates with clients to develop the ideal combination of services to maximize savings for their customers. 

“We don’t have to boil the ocean to produce a sizeable reduction in healthcare costs for our employer clients,” said Heyward Donigan, former President and CEO of Vitals and now CEO of Rite-Aid, in the Vitals report. “Focusing on routine, shoppable procedures that are relevant to the demographics of a client’s workforce generates significant savings.” (Photo copyright: Wall Street Journal.)

Price Shopping for Surgery

In 2018, before changing its name to Sapphire Digital, Vitals sold its consumer services division to WebMD. The sale enabled Vitals to focus on enhancing and developing its price transparency tools. The company then launched Medical Expertise Guide (MEG), which uses advanced analytics to create “proprietary Composite Quality Scores for surgeons and facilities to help consumers find the best surgeon and facility combination for their surgery, at a predictable cost,” according to Sapphire Digital’s website.  

“MEG brings consumers information, powered by data and analytics and supported by personalized service, to help them make quality healthcare decisions with confidence,” said Donigan, in a news release. “MEG guides employees to the best care, while helping employers manage the overall cost-effectiveness of their healthcare program.”

Examples presented in the news release of the “savings per case” for people using MEG include:

In October 2016, Dark Daily reported on another example of using healthcare transparency tools from Castlight Health. That tool enables Safeway employees to check clinical laboratory prices on their smartphones or computers before selecting where to have tests performed. At that time, Safeway and its employees were able to reduce spending on clinical laboratory tests by 32% in only 24 months by selecting the labs with the lowest prices.

The examples presented above are evidence that price transparency is gaining a foothold in healthcare. These are early demonstrations that price shopping tools do help consumers make more informed decisions when choosing hospitals, physicians, or clinical laboratories. The trend is for ever-growing numbers of consumers to rely on pricing transparency tools when selecting their medical care.

Pathologists and clinical laboratories should not ignore this trend, as it could affect business workflow and revenue streams. 

—JP Schlingman

Related Information:

Encouraging Patients to Shop Around Amid High Healthcare Prices

Show ‘Em the Money: Paying Patients to Shop for Affordable Medical Care

Vitals SmartShopper Expands to Millions of Consumers in 2018

Vitals SmartShopper Book of Business Report 2017

Vitals Launches MEG, A Medical Expertise Guide for Health Care Shopping

Vitals Announces Company Name Change to Sapphire Digital

From Casting Light to Total Eclipse? Can a New CEO Turn Around Castlight Health?

Vitals Study Shows Consumers Using Cost Transparency Tools Select Clinical Laboratories with Low Test Prices

Using the Reference Pricing Strategy, Safeway and its Employees Reduce Spending on Clinical Laboratory Tests by 32% in Only 24 Months by Selecting Lab with Lowest Prices