How Healthcare Companies Are Taking a Page Out of T-Mobile's Playbook

By Markets Fool.com

The healthcare industry is notoriously opaque when it comes to pricing -- a trait it shares with some wireless service providers and the cable industry. But with customers increasingly demanding pricing transparency, smart healthcare companies are following T-Mobile's lead and becoming more upfront about costs.

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Find out what Motley Fool analysts Kristine Harjes and Vincent Shen think of the trend in this clip from crossover week on Industry Focus: Consumer Goods.

A full transcript follows the video.

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This podcast was recorded on Nov. 15, 2016.

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Vincent Shen: This is something that's been very prominent recently in headlines,and that's with price transparency. On the retail side,you don't see this quite as much. A really good example that I could think of wasT-Mobile. T-Mobile and its CEO, John Legere, he has his Un-carrierinitiatives. Basically, these have beenbreaking industry standards in terms of billing,practices in terms of what your data is,how those things work out. These Un-carrierinitiatives are designed to be very friendly to the consumer, and honestly put some egg on the face of thecompeting wireless service providers likeVerizonand AT&T,by saying, "They have thesereally shady billing practices, they're charging you for overages, we're going to stop doing that." Even on your cable bills, in some cases,Comcasthas gotten flak, for example, for adding fees below the line so they can basically market, "Yourmonthly service will be $50," butin actuality there's $15 more of fees and they'rejust reclassifying it. So there are some moveson the retail side with price transparency. But in the healthcare side,it's really something we're seeing in the headlines quite a bitin terms of the EpiPen and some other controversies. What's going on there?

Kristine Harjes:Those weresome really good examples. When we first brought this up as a topic,the way that I saw this going was,we would talk about how,McDonald's, you walk in andthere's a menu and there's pricesand you know how much things are going to be, thenI was going to paint this stark contrasting picture of healthcare whereeverything is so murky and you can't see what anything's going to cost until you get the bill. But yeah,those examples you described have a lot of symmetry. For example, there is this big issue in healthcare coverage whereyou might not know exactly how much you're going to be charged for some sort ofprocedure. So you go to a clinicand you know that the clinic is in network. But, you don't know thatevery single doctor that might see you within that clinic --or maybe just one person involved in your surgery --is not actually in network. Andthen you get slammed with this big bill,and it's a surprise, it's always a surprise.California, in September, passed this law called ABO72. That'ssupposed to protect people from this by limiting the patient'sfinancial obligations to what they would have paid had the provider been in network.

So, you start tosee these little incremental steps,because people are demanding it. They can no longer accept that when yougo to a hospital, you don't get a menu like you get at McDonald's, that says "Here'swhat everything is going to cost, and the right to refuse an extra $42 Band-Aid." You just get the bill at the end. We do have a shift going onwithin the industry where people expect to know what they're going to pay beforehand.

Shen:I honestly could see thatas a huge point of differentiation for certain service providers within the healthcare space. You can go to one hospital that is much moreopen and transparent about what you're paying for and everything,and on the other side it's a bit murkier,and I can see people valuing that transparency and turning there.

Harjes:Yeah,it's a competitive advantage. It's a competitive advantage for hospitals. You see themstarting to post reviews online of open and honest feedback. It's adifferentiator for insurers,for example, if you have an app that's really easy to use,people can see what they're going to pay, and they value that.

Kristine Harjes has no position in any stocks mentioned. Vincent Shen has no position in any stocks mentioned. The Motley Fool recommends T-Mobile US and Verizon Communications. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.