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There has been increased interest in expanding the Medicare Prospective Payment System (PPS) to non-Medicare payers to provide incentives for hospitals to contain costs and to concentrate in those Diagnosis-Related Groups (DRGs) which they can provide efficiently. However, this should not force low-volume, low-cost payers to subsidize high cost payers and should not penalize low Length-of-Stay (LOS), low-cost hospitals. This article proposes a new method proportional pricing to expand PPS incentives to non-Medicare payers with equity for payers and hospitals. It would also allow all-payer rate setting and premium price competition among payers to coexist.

This study aims to map and analyze health-care pricing information research. This work highlights current gap in pricing information research in health care and proposes future research avenues to academia and industry professionals.

A bibliometric method was adopted to analyze extant literature on pricing information asymmetry. Semistructured interviews were conducted with key stakeholders in health care to triangulate the findings.

Pricing information is crucial for all stakeholders including health-care consumers, providers and regulators. The popular research areas were the rising health-care cost, cost-saving, outcome-based pricing, price based on service supply and demand, insurance and out-of-pocket spending. Cost–quality perceived linkages, cost–demand correlation in health-care service and cost–price interlinked drivers were the dominant themes in extant literature. The study highlighted that pricing information asymmetry pushed patients from weaker sections into a debt trap due to unplanned out-of-pocket health-care expenses. The study suggests areas of research to minimize this pricing information asymmetry.

The emerging themes in health pricing asymmetry will help key stakeholders to identify areas for improvement and take remedial actions in the health-care domain.

This study is a pioneering effort to summarize extant literature published in the health-care information pricing domain and analyze it from a bibliometric perspective. The study also triangulates the finding with primary data from key stakeholders and highlights emerging research areas.

Since Jan. 1, 2019, the Centers for Medicare and Medicaid Services' (CMS) rule requiring hospitals publish their “standard charges” (also called “charge description masters” or “chargemasters”) in a public, machine-readable format has been in effect. The research at hand assesses hospital compliance with the federal regulation. In addition, a sentiment analysis of the chargemaster webpages compared to hospital homepages is performed to assess the consumer friendliness of the content in terms of language usage. A stratified sample of 212 hospitals was used to conduct observations. Strata were based on patient satisfaction scores drawn from the Hospital Consumer Assessment of health care Providers and Systems survey, and controls for hospital bed size and geographic US census region were utilized from the American Hospital Association Annual Survey. Descriptive statistics are presented, and chi-square testing is used to test for statistically significant differences. Key results are presented for compliance and sentiment. Most hospitals' websites are not presenting chargemaster data in a way that is readily collectable or comparable to other facilities. In addition, the tone of language used on chargemaster transparency webpages is generally more negative than that of hospitals' homepages. In particular, the messaging on transparency pages routinely suggests consumers to not use the data for decision-making purposes.

The learning outcomes of this study are as follows:

1. the benefits of differential pricing over uniform pricing;

2. the differences between second- and third-degree price discrimination;

3. the rationale for charging different prices for segments having different willingness to pay; and

4. how different prices for the same product can lead to perceptions of unfairness and how companies might manage such an issue.

This case outlines the decisions that Adar Poonawalla, the CEO of Serum Institute of India (Serum), had to make in late April 2021 concerning its pricing for the COVID-19 (Covid) vaccine. Serum was the world’s largest manufacturer of vaccines, and its Covishield vaccine had received regulatory approval, but faced an unusual challenge and opportunity. In most countries, governments had procured Covid vaccines from manufacturers and then delivered the vaccines to consumers free of cost. But in India, there was a three-tier pricing system. While the Government of India had committed to free vaccines in government-run public hospitals, it also allowed vaccine makers to directly sell vaccines to state governments, as well as private hospitals, who were at liberty to charge consumers for the vaccines. This created an interesting pricing dilemma for Serum: as different customers had different willingness to pay, should Serum use differential pricing? Would such a tiered pricing system be considered fair? How many different price points should Serum maintain? By exploring these and related decisions that Poonawalla had to make, the case is intended to teach price discrimination.

The case is intended for graduate-level courses in marketing, pricing and economics. This case illustrates the principles of differential pricing/price discrimination. More specifically, it highlights pricing strategies motivated by second- and third-degree price discrimination in an emerging market’s health-care context. From the information in the case, the student can learn to apply the concepts of second- and third-degree price discrimination in marketing. After working through the case and assignment questions, instructors will be able to help students understand the following concepts:

Teaching objective 1: the benefits of differential pricing over uniform pricing.

Teaching objective 2: the differences between second- and third-degree price discrimination.

Teaching objective 3: the rationale for charging different prices for segments having different willingness to pay.

Teaching objective 4: how different prices for the same product can lead to perceptions of unfairness and how companies might manage such an issue.

Teaching notes are available for educators only.

CSS 8: Marketing

Governments in developed and developing countries alike typically subsidize social services such as health and education, partly in recognition of the broad social benefits that are generated, and partly to serve broad equity goals. Governments often provide such services themselves, or at least play a major role in provision, and subsidy is often effected by setting prices at government facilities at levels that are considered affordable by the poor. The extent to which redistribution is achieved, however, depends on how well proper targeting is accomplished. Uses a number of public hospitals in Thailand to explore the pricing of hospital services and its effect on provider and user behaviour. A survey of hospital users helps to identify the beneficiaries of the current system. Calculates the degree of cost recovery for each hospital department public facilities and estimates user responses to price and income changes. Compares costs, fees and actual payments to provide an indication of the extent of subsidy and the degree of cost recovery from different groups of patients. Finds that although public hospitals appear to be the only place affordable by the lowest income groups, they also serve middle to high income users as well. Argues that targeting can be improved. Also finds that hospitals charge only about 52‐58 per cent of cost for out‐patients, and 62‐66 per cent of cost for inpatients. In addition, among those who finance their own health care expenses, actual payment varies from 20 to 90 per cent of charges. As for the extent of subsidy, an out‐patient in the North receives an 88 per cent subsidy as in‐patients receive an even higher subsidy of 94 per cent. There is also some evidence that the extent of subsidy is high for the higher income groups. While welfare programmes appreciably benefit the lowest income groups, this is not exclusively so, and many beneficiaries fall into the medium and even high income categories. Government officials, most of whom are classified in the middle to high income groups, turn out to be most heavily subsidized through the civil service reimbursement of medical expenses. On the whole the estimated demand elasticities show that the demand for in‐patient and outpatient care is in general not sensitive to changes in price, money income, or total household income. Recommends further investigation into the possibility of greater selective reliance on user fees, with built‐in safeguards and better targeting of public services to protect the disadvantaged groups. Specifically recommends a closer alignment of user fees with the costs for services utilized by higher income groups (such as private rooms), with provision for continued subsidization of low income groups. Targeting would thus be improved.

There is a widespread push by government and private payers to make the prices of health care services more transparent to consumers. The main goal is to promote more effective consumer shopping; secondary goals include promoting provider competition and reducing pricing variation. There are several headwinds opposing these efforts. One problem is that there may be several valid reasons for why price variations persist. Another is that provider (and other health care) markets are not very competitive, and sometimes widespread information about prices may make them even less so. A third is that price discrimination may be economically efficient. Any analysis of price transparency must take the specific market setting into account. This chapter analyzes markets characterized by monopolistic, oligopolistic, and competitive conditions to determine when and under what economic and managerial circumstances price transparency will be useful.

The Bureau of Economics in the Federal Trade Commission has a three-part role in the Agency and the strength of its functions changed over time depending on the preferences and ideology of the FTC’s leaders, developments in the field of economics, and the tenor of the times. The over-riding current role is to provide well considered, unbiased economic advice regarding antitrust and consumer protection law enforcement cases to the legal staff and the Commission. The second role, which long ago was primary, is to provide reports on investigations of various industries to the public and public officials. This role was more recently called research or “policy R&D”. A third role is to advocate for competition and markets both domestically and internationally. As a practical matter, the provision of economic advice to the FTC and to the legal staff has required that the economists wear “two hats,” helping the legal staff investigate cases and provide evidence to support law enforcement cases while also providing advice to the legal bureaus and to the Commission on which cases to pursue (thus providing “a second set of eyes” to evaluate cases). There is sometimes a tension in those functions because building a case is not the same as evaluating a case. Economists and the Bureau of Economics have provided such services to the FTC for over 100 years proving that a sub-organization can survive while playing roles that sometimes conflict. Such a life is not, however, always easy or fun.

This paper aims to investigate the effects of service quality and perceived price (monetary and behavioural price) on the revisit intention of patients to hospitals, as well as the mediating role of perceived price on the relationship between service quality and revisit intention.

This paper distributes questionnaires to outpatients in three major cities in Malaysia, namely, Penang, Melaka and Johor. Patients who were in the foyer, dispensary area and waiting area were intercepted where their responses were sought. The responses obtained from 400 patients were analysed using the structural equation modelling technique. Besides analysing the path coefficients, this study has examined the common method variance, bias and indirect effects of the relationships.

The results suggest that patients pay more attention to certain values in their search for the best health-care service and subsequently move on to new values. Pricing is an effective strategy to promote favourable behavioural intentions amongst patients. Better service quality is reflected in the reasonableness of monetary costs incurred by patients in acquiring health-care services. Patients who received poor services will be more likely to compare such services to the medical costs incurred to ascertain the worthiness of the amount paid. In addition, service quality also influences how patients perceive spending their time and efforts (waiting for nurses and physicians, as well as queueing in hospitals) as worthy and vice-versa. Their revisit intention will also be affected by the extent of which they invest their time, energy and efforts to search for relevant information.

The hospitals which desire to charge additional fees should enhance their service quality to reflect price equity. This is imperative in view of the pricing structure which can be relatively complex in subsequent follow-up treatments that may affect the decision of patients on the sources of health-care services.

Given the inevitable increase in medical fees, the perceived price can be a key determinant to the overall judgement patients had in terms of the health-care services received and the time and efforts sacrificed. However, the importance of monetary price and the behavioural price is still relatively unstudied, particularly their influence on revisit intention in the health-care setting.

This study examines whether nonprofit hospitals (NPHs) use price increases to overstate reported charity care spending. Anecdotal evidence points to hospitals raising prices to maximize Medicare's supplemental reimbursement and to maximize collection from self-pay and uninsured patients. This study provides empirical evidence that NPHs raise prices in part to satisfy the state's charity care requirements and to substitute real care with price-valued charity care. The ratio of charges to costs (RCC), price standardized by cost - a measure for comparing revenues generated to estimate costs allocations, is used to test the association between price increases and charity care reporting by NPHs. We hypothesize and find evidence that NPHs facing financial and political pressures in addition to charity care regulations are more likely to report a higher value of charity care.

This paper aims to discuss the implementation process for the new diagnosis-related groups (DRG) accounting system in the health-care sector, and the struggle to gain acceptance for the system. The emphasis is on the goals and the expected results of the system, and how the system finally becomes an actuality.

The paper illustrates the framing of an accounting system, that is, how the health organization constructs the goals and the purposes of the system during its implementation. The empirical data consist of interviews, newspaper articles and notes from participatory observations.

The goals and the purposes of the new system were not defined ex ante, but rather emerged as supporters of the system found a common language. This commonality enabled the linking of the interests of the hospital managers with the DRG system. At this point, the actual DRG-based systems for the product categorization and the full-cost pricing system became heterogeneous. Making the system visible through discussion entailed seeing the invisible. Seeing the invisible allowed the system to become a reality (national comparability). Visibility helped the DRG system to gain approval and become a stronger system.

This study is an illustration of a unique social process. The study’s applicability under other circumstances should be considered with caution.

The paper illustrates how the purpose of an accounting system emerges and is constructed through the interaction between various actors.