In a last-ditch attempt to preserve their historic practice of charging whatever the market will bear, almost always after the fact, U.S. hospitals filed a lawsuit against the Trump administration over its proposed Transparency in Coverage rule.

The suit, brought by the American Hospital Association (AHA) trade group, isn’t surprising. Hospitals have long resisted efforts to align their prices with the value of the services they provide. Costs have not been connected to quality, and in a world of secret prices, no one can shop around for more affordable services. In the absence of meaningful data linking price to outcomes that matter, consumers have been forced to rely on marketing reputation and physician referrals.

With industry consolidation and the acquisition of primary and specialty care practices by those growing healthcare systems, referrals may reflect pressure to keep things ‘in the family’ rather than what’s in the patient’s best interest. To the extent that reputation reflects hard data representing specific outcomes that matter, it’s a perfectly valid and reliable indicator of excellence. Unfortunately, the industry has relied on easier to measure proxies for quality (e.g. number of board-certified physicians in a given field, number of cases performed, etc.) and not quality outcomes themselves.

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