Transparency in healthcare: overview, challenges, and benefits

For years, the healthcare industry has been a black box. Patients have long been expected to put their trust (and money) in the system—despite having little-to-no visibility into how it functions or if it’s actually working for them.

But that’s all changing. There’s been a growing demand for transparency in healthcare, particularly related to costs and quality of care.

In a 2023 poll, a whopping 95% of people said it’s important for Congress to pass a law to make healthcare costs more transparent to patients.

Yet to achieve transparency, we need to understand it. This post explains what transparency in healthcare is, why it matters, and the key challenges the industry needs to overcome to bust open the black box for good.

What is transparency in healthcare?

Transparency in healthcare is when providers and organizations in the industry are willing to openly share information with patients, the public, other stakeholders, and even perceived competitors. This can include sharing clear, easy-to-access information related to:

• Treatment options
• Medical outcomes
• Decision-making criteria
• Pricing
• Patient experiences
• Quality of care

Research shows that transparency increases patient understanding and trust, improves accountability among companies and providers, aids decision-making, and supports higher quality treatment.

Put simply, transparency means organizations are no longer keeping information under lock and key. Instead, they’re candidly sharing what they’ve learned and know in order to improve the patient experience, health outcomes, and the industry as a whole.

4 recent healthcare transparency laws

Transparency is more than a best practice in healthcare—it’s now mandated in many different areas. Here’s a quick look at a few of the biggest recent transparency laws and policies:

• 21st Century Cures Act of 2016: Largely focused on accelerating innovation and development of medical products, this law promotes the use of real-world evidence (meaning from real patients), improves access to clinical trial information, and requires more open communication about medical products and treatments.

• CMS’ Transparency in Coverage Rule of 2020: This regulation issued by the Centers for Medicare and Medicaid Services (CMS) requires health plans to provide consumers with real-time, personalized cost-sharing information and to make detailed pricing data publicly available.
  

• No Surprises Act of 2020: This was signed into law to protect patients from unexpected medical bills for out-of-network care in emergencies or when treated by out-of-network providers at in-network facilities.
  

• Hospital Price Transparency Rule of 2021: This regulation mandates that every hospital operating in the U.S. offers clear, accessible pricing information about the services and procedures they provide.

Many of the laws and regulations relate to improving transparency about the cost of healthcare services. However, it’s important to note that there’s increased patient demand for transparency across all aspects of healthcare—not just the financial ones. For example, patients also want to understand their different treatment options and potential outcomes.

Key challenges to achieving transparency in healthcare

If transparency is such a growing and important concern, why isn’t it the norm in the industry? Well, several barriers make transparency in healthcare particularly challenging, including:

• Complexity of healthcare pricing: Healthcare pricing is notoriously complex, and it’s one of few industries where the actual prices are a mystery to everybody—including the people doing the billing. Prices for healthcare services can vary widely based on the specific treatment, location (both geographically and by facility), and the patient’s insurance coverage. That makes it difficult to clearly communicate expected costs.
• Lack of standardization in data sharing and reporting: Different providers use different formats and systems for things like electronic health records and billing systems. This inconsistency makes it tough for patients to access clear, reliable information and also makes it more difficult to integrate data across healthcare platforms.
• Data overload: Patients want information but they also don’t want to be overwhelmed with complex medical terms and detailed pricing data. Providing too much information can be difficult to interpret and increase confusion, so providers and healthcare companies are forced to walk a fine line.
• Stakeholder resistance: Healthcare markets are competitive, which is ultimately a benefit to consumers. However, it does make providers and insurers hesitant to share certain information due to competitive or financial concerns.
• Administrative undertaking: Compiling and reporting data requires significant time and resources. According to the American Hospital Association, just the annual Medicare cost report is time-consuming and complex—demanding dedicated staff, expensive software, and sometimes even consultants and auditors. And that’s just one report. In many cases, transparency hasn’t been made a priority because it’s simply too burdensome.

5 benefits of transparency in healthcare

Challenges aside, transparency in healthcare is still well worth striving for. Here’s why.

1. It helps patients make more informed decisions about their care

Patients can’t make informed decisions without, well, information. And, according to McKinsey, 60% of patients say they want more information when deciding where to receive care. When they have access to clearer pricing, available treatment options, and reported outcomes, patients can better weigh their options and make decisions that better align with their preferences, resources, and needs.

2. It builds trust in providers and the healthcare system

Expecting patients to have faith in the healthcare system while having little-to-no information is a big (and near impossible) ask. Patients deserve information about the quality of care, the qualifications of their providers, and the potential costs. This level of visibility reduces suspicion and improves accountability, leading to stronger relationships between patients and providers—and the healthcare system as a whole.

3. It improves the quality of care

Research shows that transparency in healthcare can improve the quality of care patients receive. When performance metrics and outcomes are visible, hospitals and providers are more motivated to achieve and maintain high standards (and surpass the performance of competitors). Plus, patients have access to the information they need to choose higher quality treatments and providers, creating a system where quality is incentivized above anything else.

4. It reduces costs and surprises

41% of insured adults say they’ve received a surprise medical bill. But these sorts of unexpected costs should be the exception in the system—not the rule. Transparent pricing and information about treatment options help patients avoid unanticipated bills and out-of-pocket expenses. With clear cost breakdowns and insurance coverage details, they benefit from more predictable healthcare costs and the ability to plan for those expenses. Transparency also holds providers accountable, which has been proven to reduce the costs of healthcare services and save employers and payers more money.

5. It encourages competition and innovation

Comparison can be a powerful motivator. When patients have the ability to compare different treatment options, providers are incentivized to improve their services. This drives innovation in care and treatment options, which benefits patients and also improves the industry as a whole.

Healthcare transparency has been pushed into the spotlight in recent years—and it’s likely here to stay. While there are challenges to making it a reality, the benefits are undeniable. Patients can make more informed decisions, build deeper trust in the system, and receive higher quality care at a more reasonable cost. Those are wins worth fighting for.

Ultimately, the focus of healthcare should be placed on the patient. Increasing transparency is one of the best steps the healthcare industry can take to empower, educate, and positively impact the people it serves.

End-to-end transparency is a core principle of Carrum’s approach. Learn more here.

The information contained on this page is for informational purposes only. No material is intended to be a substitute for professional medical advice, diagnosis, or treatment.