Transparency a Go Go?

As the fashionistas might say, transparency in health care is having a moment. It made the PricewaterhouseCoopers top 10 list for 2014 industry issues, and there is every reason to expect transparency to be very visible this year and beyond.

Without a doubt, transparency is hot.

Despite this, there is increasing grumbling by observers who say that transparency is complicated and hard to operationalize. We also hear that transparency is “not enough” to constrain costs in our dysfunctional system, especially in the face of provider market power.

The word itself invites skepticism, in that it seems to over-simplify and promise a magical solution, as if daylight will provide health care pricing with a glow of rationality.

As usual, the truth lies somewhere in the middle. Transparency can and will provide information about price, quality, and consumer experience that market participants need in order to better understand the health care system and increase its value.

While this information is surely necessary, we have seen many examples of when it is not sufficient. Clearly, transparency is not the only tool that we need.

Here are a few thoughts about transparency issues for 2014.

Transparency tools will hit Main Street.

Increasingly, consumer-facing tools with various kinds information about health care prices are being created, whether it is okcopay or Change Healthcare. These entries join a growing list of transparency tools from carriers or third-party vendors.

The Robert Wood Johnson Foundation’s Hospital Price Transparency challenge, designed to promote awareness of hospital charge data, had a record number of entrant and the winning submissions are downright inspiring. RWJF also awarded grants for research on the use of price data in health care, including a number of studies of promising transparency tools aimed at consumers and providers.

The field is becoming more crowded, and it is increasingly important to determine the optimal way to reach the consumer with price and quality information.

There will be greater focus on the customer experience.

There is no doubt that the customer experience in health care lags behind the rest of the service sector, and consumers are increasingly demanding responsiveness and convenience in their encounters with the medical profession. The growth of evening and weekend hours, email communications with physicians, and patient portals are all harbingers of a new age where medicine is far more customer friendly.

RWJF’s Open Notes initiative allows patients to share notes with their doctors, while the Foundation’s Flip the Clinic program completely reimagines the doctor patient encounter in the ambulatory care setting.

Patients want to share their personal experiences from seeing physicians and read about the experiences other patients have had. However, while online doctor rating sites have existed for several years, they are often behind a paywall and their reliability is unknown. The University of Utah Health Care system made a major contribution to promoting transparency about customer experience by sharing their patient satisfaction survey results on their website.

In 2014, we can expect an increased focus on the customer experience in health care, and on creating new ways for patients to share their experiences.

Overuse increasingly becomes a consumer issue.

Transparency about health care quality means more than public reporting—it also includes patients’ rights to have clear information about when treatment may not be necessary, or when the risks may potentially outweigh the benefits. This is seen in the growth of physician-led efforts such as Choosing Wisely®, which has been the focus of consumer-facing content in popular magazines such as Consumer Reports,  and highlighted by organizations including the AARP.

These efforts further the notion that high quality care means the right amount of care, and that consumers can and should be participants in these discussions.

Is the chargemaster on the endangered species list?

In the wake of a slew of negative publicity, hospitals have become painfully aware that the chargemaster, or the comprehensive list of billable items most hospitals keep, is a public relations disaster.

The chargemaster is a financial management system that is very time-consuming to maintain, yet gives neither providers nor their patients much useful information about the true costs of care. In particular, the chargemaster gives the public an impression of much higher costs than what insurance companies and uninsured patients often ultimately end up paying for an episode of care.

In 2013, hospital pricing strategies became a punch line, even reaching the Daily Show with Jon Stewart. Already this year, Miami Children’s Hospital has reduced its chargemaster rates by 30 percent in response to patient complaints over high prices.

Will hospitals seek an alternative?

Providers need transparency, too.

Hospitals and other providers know that price transparency is here to stay. In advance of pending disclosure requirements that many face, some have initiated broad transparency initiatives related to publishing their charges.

Others have gone a step further and considered how greater transparency can help them internally. This was exemplified in a widely covered recent initiative by InterMountain Healthcare in Utah to create a “cost-master.” The costmaster includes detailed information on the cost of a given procedure, and is intended for use by patients and their physicians during the care decision-making process.

Even providers suffer from poor information about their payment systems. As providers become increasingly transparent about their prices, they should receive more transparent information about payments in return, and demand faster claims processing and real-time information about eligibility and reimbursement from private insurers and the Centers for Medicare & Medicaid Services.

How will payment reform coexist with price transparency?

Experimentation with different forms of payment may somewhat complicate attempts to be transparent about prices. We may lose our ability to compare apples to apples, which so animated much of the coverage of hospital prices. We need to be careful not to obscure important information in our rush away from the fee-for-service payment system and toward capitated, value-based models.

At the end of the capitation continuum, pricing becomes once again relatively straightforward. This is part of the appeal of concierge care, which offers both price transparency and an alternative to fee-for-service, as does global capitation. Yet the path to either of these points may be quite murky, and it is not clear that these are our desired destinations.

Will we ask for more transparency about affiliations?

In the face of increasingly consolidated provider markets, it’s hard to believe that price transparency alone can constrain costs. Hospital mergers and physician practice acquisitions are proceeding at a record pace, along with the growth of many other types of affiliations between providers which are hard to characterize and even harder to measure. These consolidations and other significant financial relationships are conducive to growth in provider market power, which has a known and pernicious effect on prices.

Many states are requiring provider price disclosure, but few ask for reports of significant financial relationships. However, this could change. Might the disclosure of financial relationships and other affiliations be seen as a transparency issue?

The ultimate goal is greater value to consumers.

For health care markets to provide maximum value to consumers, there needs to be transparent information about price, quality, and customer experience, but there must also be competition between providers. In recognition of a broader consideration of market attributes, RWJF is launching a major new effort to measure the health of our nation’s health care markets.

This project will combine information on factors such as price, degree of competition, transparency, and utilization to create a rating system that can be used to rank health care markets according to how much value they provide to purchasers and consumers. Look for an update in the months ahead.

Katherine Hempstead, Phd., MA, is a team director and senior program officer for the Robert Wood Johnson Foundation.

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  3. Like most plausible ideas in healthcare, transparency risks excessive extrapolation, i.e. if it works in one instance it must work in all, as we seem to have an insatiable desire for magic bullets.

    If one is in the ICU, knowing the price of the Swan Ganz catheter when one is battling between cardiogenic or non cardiogenic pulmonary edema is hardly going to matter.

    “$5000 – no stick to jugular vein distension doc, $500 – now we are talking doc”. Really? Can anyone imagine this conversation practically, let alone ethically?

    But it can affect decisions in the out patient setting where death is not imminent such as deciding between a $1200 MRI of the knee, or just taking it on the chin (or the knee) and using the money for gambling in Vegas, instead.

    Price transparency works if there is price elasticity.

    It won’t work if there is not (think bottled water in the Sahara Desert).

  4. My fear is that all we’ll discover with transparency is “the Emperor has no clothes.” We must be careful what we wish for.