The medical device information managed and controlled by supply chain management is not only used by clinical and finance managers, but nurses and patients as well. When it comes to Pricing Transparency, supply chain executives must be involved from the beginning. The strategic approach that enables the collection of this information and ultimately ensures the information remains accurate is vitally important. As we all intimately understand, medical device information is extremely dynamic and this is why supply chain executives must remain involved stakeholders to ensure the strategy remains relevant.

What does Pricing Transparency really mean, particularly to Americans outside the healthcare industry who are accustomed to comparison shopping for everything from clothing to food to cars? As Uwe Reinhardt, Princeton University Professor of Economics explained it: "Suppose I took you to [a department store], blindfolded you, pushed you through the door and said, 'Find yourself a nice blouse that fits you and make sure the price is right.’ Obviously, most Americans would consider the situation ludicrous.” But, adds Reinhardt, “that's roughly how we buy healthcare. If you go to the hospital, what do you know about the prices? What do you know you will get? Have you ever picked your own anesthesiologist?" As consumers, Americans shop around for everything from cars to clothes and computers, but Professor Reinhardt says we are powerless when it comes to buying healthcare.

To those of us intimate with the healthcare industry, Pricing Transparency is a compelling and complex challenge. Pricing Transparency is truly ‘Cost Transparency’ from the supply chain perspective, and in this changing environment we all need to understand the effort and collaboration required to link our supply costs to patient charges. This challenge defies a simple answer and instead requires a multifaceted perspective and executive commitment. As leaders we must develop and manage this critical transition.

At Alegent Health, the process of improving the integration between supply chain management and patient finance is an ongoing process. Over the past year, Alegent has been designing its strategic plan based on how it will tie its costs to its patient charges.

"It is essential that our hospitals continue to better identify those costs that support our charges. This is especially important due to the recent regulatory focus on costs versus charges (particularly implants) and the potential reimbursement implications on how these are presented on our Medicare cost reports,” said Michael Hatt, Operations Director of Reimbursement. “At the same time, we also feel our patients deserve Price Transparency, which is why we’ve developed My Cost, a patent-pending online patient cost estimator. Coupled with our publicly-reported quality scores, our patients have the information they need to make good healthcare decisions."

To successfully address these pressing issues, IDNs should focus specifically on identifying and understanding their costs. They are starting this journey by looking at their data, as well as their internal processes. This first step includes ensuring that information systems have accurate and relevant information and that each system is well integrated. From a supply chain perspective, the strategy must tie the hospital’s costs to the hospital’s charges, which ultimately leads to the question of how to structure and design the patient charge master, and how ancillary systems will collect and submit patient charge information. Each of these and subsequent steps rely on executive leadership and internal innovation; supply chain executives must be prepared to be a part of it.