A Different Right to Privacy

Given Matthew’s quite visceral response to some complaints that broad-based, government-encouraged (mandated, I suspect), electronic medical records I am interested in both his and THCB readers’ thoughts on the Bangor Daily News editorial staff’s approach to health care reform.

They suggest that transparency is the key – "lawmakers should require health providers and insurance companies to report all of their costs to the public."

Note the very significant difference here between disclosure of prices and the newspaper’s use of the term costs.

Few have issue that, to the degree possible, it ought to be reasonable that one knows the cost of something prior to purchasing it.

But the newspaper goes much, much further – they want complete disclosure of all of the costs that go into running the business – whether it be a doctor’s office, a hospital, an insurance company, a chiropractor, acupuncturist, physical therapist, and on and on.

What are the components of that price? Doctors’ salaries, medicines and space in the operating room are obvious components. But what about the salary for the hospital CEO, the cost of landscaping hospital grounds and the salary of the health care lobbyists, how much did that add to the bill?

Clarifying this: the state should have complete, unfettered access to all private records of everyone involved in health care delivery.


Really: read the actual language of Arizona Minority Leader Phil Lopes (not a back bencher by any means) "Health Security Act" in section 36-3126(D):


Why does this matter?

Because, if one presumes that individual behavior adversely contributes to the cost of healthcare-for-all, is it an unreasonable stretch to presume that the wise, knowledgeable appointees who will oversee these health plans will someday – soon – require that we are able to provide similar disclosures about how we spend all of our money.

Scrutiny could then be placed upon the personal habits of all of us – with the eventual result that Mrs. Jones will not be allowed to buy ice cream, while Mr. Smith will be threatened with fines for the excessive use of  pasta…

So, if privacy is important—defined as the ability to determine who has access to our most personal information… is the pontificating of the BDN editorial board something any of us should support?

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9 replies »

  1. So Eric, does that mean that no AZ tax money is spent on healthcare?
    “patient and provider– as within the purview of government bureaucrats for review and control”
    Another scare statement that says big gov will audit an individual’s bank statements if we ever get single-pay. You must be hearing footsteps closing in Eric. Paranoia will destroy ya.
    Just not happening, at least in Canada’s system, and I doubt any other system. Doctors are audited on a random basis based on extracting billings out of the norm. So exactly how would you control fraud Eric?
    Frankly I have no interest in knowing what a hospital/doctor makes or spends (in a micro sense) unless it/he is receiving tax dollars. But to have this info easily public accessible is probably not necessary. That’s why there are oversight boards. Publication of salaries with no other reference is meaningless. I would expect though that it/he is audited to account for billings and think it important to know what is included in costs that represent those billings. Is a small payment to the CEO’s hooker through his personal account something we should be interested in?
    Barry, PAC money IS important and should be disclosed, no matter how small % of gross income. But I do believe all PACs have to disclose anyway – correct?

  2. Peter- distinction worth remembering: GOVERNMENT spending involves your money and my money.
    What YOU spend YOUR money on (as long as I have not given it to you) is YOUR business, not mine.
    Therein lies the issue, of course… those who believe that central planning for healthcare is the solution will view ALL HEALTHCARE SPENDING– patient and provider– as within the purview of government bureaucrats for review and control.
    Thank you for clarifying this for all THCB readers.

  3. Peter,
    From the perspective of an individual hospital, including the largest Academic Medical Centers, money spent on lobbying is little more than a rounding error within the context of their total revenue and cost base. My employer, with revenue in the $15-$20 billion range, has a corporate PAC which dispenses, at most, a few hundred thousand dollars a year, and the funding comes from employees. Even the largest corporate PAC’s only raise a few million dollars annually. I also think it is wise for hospitals (and all organizations for that matter) to pay their people from the CEO to the janitor enough to attract and hold competent personnel.
    Since your wife is a nurse, you should know that most of a typical hospital’s costs (about 65%-70%) are for employee compensation, including benefits. Another 15% or so is for supplies. Hospitals are a high fixed cost business which means they need to run at a high occupancy rate consistently to make the economics work. Let them compete, but give me (and my referring doctors) the robust price and quality transparency tools we need so we can make cost-effective healthcare decisions in deciding both what care options make the most sense and which doctors, hospitals, imaging centers, drugs, etc. will provide the best value.

  4. “I would like to see episode or package pricing that includes the hospital stay, physician and anesthesiologist fees, physical therapy, drugs, imaging, and anything else that might be required.”
    Barry, would you not like to see reasonable indirect costs as well? Knowing how much is spent on lobbyists or management might give you information on whether the extra cost is for better treatment or not. Will you assume that extra cost is for better quality? And how much transparency do you require when public money is being spent on private enterprise? What kind of accountability do you require? If we could set hospital budgets then I guess we could then let the public decide by exposure what’s being spent on direct and non-direct healthcare. But as long as the money spigot is open then how do we attempt to control costs?
    As usual Eric is splitting hairs in an attempt to create frenzy by trying to have us focus on lawn care when there is a larger issue here. Eric, when the AZ state budget is up for review and possible increases in taxes how much detail do you demand?

  5. Someone should let the Bangor paper know that hospitals have been filing detailed cost accounting reports (“cost reports”) for dozens of years in conjunction with Medicare and Medicaid reimbursement. The state of Maine receives one each year for each hospital. If this is the depth of understanding by one of the state’s leading newspapers, this plan is doomed. Most states, and Maine in particular, don’t have the money to fund healthcare for all, as they are defining it. Unless and until the Feds decide it is a worthwhile way to spend 18-20% of our GDP, states like Maine will try and fail to provide true universal access to healthcare.

  6. What Barry said…with the addendum that for the economy as a whole it does matter how the highest paid are doing relative to the lowest paid. We don’t want to recreate the Central and South American model of a small walled-off elite, a small middle class, and a vast uneducated and not very productive majority.
    But I don’t think the best way to save the middle class and give the poor adequate education to make a larger economic contribution is to publish all salaries, travel expenses, etc., etc.
    A more progressive tax system and a shift from military to educational spending would do a better job of that. This bill is really dumb.

  7. This proposal is just plain dumb. Anyone who knows anything about accounting knows that there are direct costs and indirect costs. Indirect costs (CEO’s salary, landscaping, etc.) have to be allocated to the revenue generating departments in some manner which is always a somewhat subjective and arbitrary process.
    As a patient and a taxpayer, what I really want is price and quality transparency. For expensive procedures performed in hospitals (especially surgeries), I would like to see episode or package pricing that includes the hospital stay, physician and anesthesiologist fees, physical therapy, drugs, imaging, and anything else that might be required. I would also like data on outcomes, infection rates, complication rates, readmission rates and the like which I can then compare against other hospitals and surgeons as well as the all in cost of the episode that would be charged by other hospitals and doctors. As a benchmark, I would also like to know what Medicare pays for the procedure in question. Let the docs, hospitals and other providers work together to figure out how to fairly divide the revenue from the case rate insurance reimbursement. I couldn’t care less about how hospitals allocate their indirect costs. If they are run efficiently, their prices should be competitive. If they aren’t, prices will be uncompetitive unless they are so clueless about their costs that they underprice their services. In that case, they will be out of business in fairly short order.

  8. We got hit with something like this in Ontario a couple of years back when it became public policy to publish all public sector salaries >100k in their local newspapers. Hospital administrators, nurses who happen to make a lot of overtime or had back pay owed, etc… Each year we get a ‘peeping tom’ look into our neighbors’ finances but our public sector costs still rise. I don’t think exposing pay like this will control costs in the US any more than it does up here.

  9. I agree the paper’s demand is insane, and not just because of the privacy issue.
    As a patient and consumer, the full disclosure I’m looking for has nothing to do with the CEO’s salary. What the hell am I supposed to do with that? Call him up and ask him for a loan? Maybe hold a righteously indignant press conference?
    I need enough detail to compare one quote against another – what’s being done for the price. If a hospital refuses to tell me, it doesn’t get the business. If they’re paying too much for landscaping, that’s for them to figure out. I’m busy being sick, remember?