Tag: Transparency

Economists Gone Wild

Economists are so embedded in their training with the concept of ceteris paribus — “all other things held equal” — that their policy prescriptions often go awry. Here are two recent examples:

First, in the March 10, 2011 issue of the New England Journal of Medicine, David Cutler and Leemore Dafney argue against transparency of pricing in the health care sector.

The rationale for price transparency is compelling. Without it, how can consumers choose the most efficient providers of care? But though textbook economics argues for access to meaningful information, it does not argue for access to all information. In particular, the wrong kind of transparency could actually harm patients, rather than help them.

Applying the sunshine rule in the provider–payer context, however, could have the opposite of the intended effect: it could actually raise prices charged to patients.

[T]he sunshine policy would create a perverse incentive for the hospital to raise prices (on average), and as a result its rivals could do the same. This adverse effect of price transparency would arise only in cases in which the buyer or supplier in question had some leverage (market power), but such leverage is fairly common in health care settings, including many local hospital markets.

What’s the flaw here? In markets like Eastern Massachusetts, there is a dominant provider which uses its market power to garner above average prices from the insurance companies in its service area. That provider, in turn, can use those revenues to offer higher salaries than its competitors, drawing doctors into its orbit. It also has more resources to expand its ambulatory care facilities. Both steps serve to further expand its market power.

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Getting Transparency Right

This is about transparency, when it is useful and when it is not. The term is now an established part of the health care lexicon, but there is little substantive discussion about how it is being used.

As I said in an article in Business Week over three years ago:

There are often misconceptions as people talk about “transparency” in the health-care field. They say the main societal value is to provide information so patients can make decisions about which hospital to visit for a given diagnosis or treatment. As for hospitals, people believe the main strategic value of transparency is to create a competitive advantage vis-à-vis other hospitals in the same city or region. Both these impressions are misguided.

Transparency’s major societal and strategic imperative is to provide creative tension within hospitals so that they hold themselves accountable. This accountability is what will drive doctors, nurses, and administrators to seek constant improvements in the quality and safety of patient care.

Now, there rises an additional misconception. The perversion of the transparency concept that has evolved rides on the desire of CMS and private insurance companies to use publicly published outcome data to financially reward or penalize hospitals. As expected, this is raising hackles. The complaints often heard from hospitals are ones we have discussed before: “The data are wrong.” “Our patients are sicker.”Continue reading…

How the Veterans are Winning the War

At a seminar last night at the Center for Public Leadership at Harvard’s Kennedy School, one of the students asked a question along the lines of, “How do you know when you have done too much with regard to transparency?” My answer was that the question presupposed the wrong approach to transparency, that it was being driven by the CEO without proper attention to the efficacy and appropriateness of what was being measured and disclosed. Instead, I suggested that it should be driven by the leadership of the organization, but based on metrics that were viewed as useful and appropriate by the clinical staff. In such an instance, transparency serves the function laid out by IHI’s Jim Conway, as summarized here in an article discussing the BIDMC experience:

[P]ublic reporting created what management guru Peter Senge calls creative tension, a key in getting an organization to change. Announcing a daring vision — the elimination of patient harm — combined with honestly publicizing the problems, fuels improvement, he said.

I expressed the concern last night that the general recalcitrance of the medical profession about engaging transparency will inevitably lead to fiats about disclosure from government regulatory agencies. The problem with those fiats is that they will be grossly constructed and force hospitals and doctors to focus on the wrong things, in a manner not consistent with widely established principles of process improvement. (See, for example, this approach in Maryland.)

Now comes the Veterans Administration, proving the case with panache! You may recall my complimentary post on the VA back in January. Thomas Burton’s article this week in the Wall Street Journal — “Data Spur Changes in VA Care” — documents this in more detail. Some excerpts:

Hospitals serving U.S. military veterans are moving fast to improve care after the government opened a trove of performance data—including surgical death rates—to the public.

The information was released at the urging of VA Secretary Eric K. Shinseki. Among other things, it presents hospitals’ rates of infection from the use of ventilators and intravenous lines, and of readmissions due to medical complications. The details have been adjusted to account for patients’ ages and relative frailty.

“Why would we not want our performance to be public? It’s good for VA’s leaders and managers, good for our work force, and most importantly, it is good for the veterans we serve,” Mr. Shinseki said in an emailed statement.

At VA hospitals in Oklahoma City and Salem, Va., the rate of pneumonia acquired by patients on ventilators was shown last fall to be significantly higher than the national VA average. The Salem hospital says a relatively low number of patients on ventilators skewed its infection rate higher, but staff members at both facilities say the numbers prompted action.

Seeing the data helped, says the Salem hospital’s chief of surgery, Gary Collin, because “you can become kind of complacent.”Continue reading…

Which Way Transparency Nirvana?

First the good news—many are pushing the envelope on public reporting of health care information these days. For instance, last week the HHS/Health 2.0 Developer Challenge awarded honors to a new mobile app—using Hospital Compare data in new and innovative ways—try it. This application maps and provides some quality information as well as immediate ER waiting times for nearby hospitals. The idea of this app challenge, as you know, is to unleash moribund federal information, such as that sitting in the creaky Hospital Compare—to innovative types who will take it and create new—and, ideally, useful ways to present the information. That’s an exciting turn that makes altogether too much sense.

Then Wednesday, I had the good fortune to attend a very thoughtful AHRQ sponsored meeting on public reporting of care information for consumers.  The meeting included a good mix of consumers, employers, regional alliance leaders, health professionals, researchers and others.  Bill Roper provided the opening keynote.  The messages ranged from overt optimism about the important role of public reporting in the drive toward sustainable high value care—to the sober assessment that although public reporting has matured (some)—we may also be reaching limits.  As Steve Jencks commented—we’ve made progress—but let’s keep some perspective here—public reporting still needs some quick wins—it “isn’t quite covered in glory, just yet.”

Meredith Rosenthal, in her plenary presentation, observed that public reporting is essentially about to graduate from high school—sitting in the guidance counselor’s office trying to decide whether to go to college or trade school.  Bob Galvin, in the closing session, added—that while public reporting is indeed in the guidance counselor’s office—and it clearly has a bright future—it’s a pretty confused student.

The problem? There seems to be near unanimous sentiment—at least in this group—that public reporting of quality and cost information is critically important to drive sustainable health care quality and value. Continue reading…

The Moral Component to Transparency

Many of you have asked if I intend to continue this blog, now that I am stepping down as CEO of BIDMC. Yes. (I’ll have to change the name. How about “The blog formerly known as . . . ” or just a simple “Not Running a Hospital”?)

Please expect a combination of commentary on current events and issues. But also please expect an occasional lesson or two from my experience of the last nine years, all offered in the hope of being helpful to others in the field. I apologize in advance if some portions seem self-aggrandizing or self-praiseworthy. I don’t mean them that way, but sometimes, to be historically accurate, I’ll have to include a few good things about myself!

Here we go. Act 2.

In a comment on a post below, author Charles Kenney asks:

Isn’t there a compelling — perhaps even overriding — moral component to transparency?

The answer, of course, is yes. Doctors and others pledge to do no harm. How can you be sure you are living by that oath if you are unwilling to acknowledge how well you are actually doing the job? As scientists, how can you test to see if you are making improvements in evidence-based care if you cannot validate the “prior” against which you are testing a new hypothesis? At the most personal, ethical level, how can you be sure you are doing the best for people who have entrusted their lives to you if you are not willing to be open on these matters?

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Privacy Paradigms: From Consent to Reciprocal Transparency

Computational innovation may improve health care by creating stores of data vastly superior to those used by traditional medical research. But before patients and providers “buy in,” they need to know that medical privacy will be respected. We’re a long way from assuring that, but new ideas about the proper distribution and control of data might help build confidence in the system.

William Pewen’s post “Breach Notice: The Struggle for Medical Records Security Continues” is an excellent rundown of recent controversies in the field of electronic medical records (EMR) and health information technology (HIT). As he notes,

Many in Washington have the view that the Health Insurance Portability and Accountability Act (HIPAA) functions as a protective regulatory mechanism in medicine, yet its implementation actually opened the door to compromising the principle of research consent, and in fact codified the use of personal medical data in a wide range of business practices under the guise of permitted “health care operations.” Many patients are not presented with a HIPAA notice but instead are asked to sign a combined notice and waiver that adds consents for a variety of business activities designed to benefit the provider, not the patient. In this climate, patients have been outraged to receive solicitations for purchases ranging from drugs to burial plots, while at the same time receiving care which is too often uncoordinated and unsafe. It is no wonder that many Americans take a circumspect view of health IT.

Privacy law’s consent paradigm means that, generally speaking, data dissemination is not deemed an invasion of privacy if it is consented to. The consent paradigm requires individuals to decide whether or not, at any given time, they wish to protect their privacy. Some of the brightest minds in cyberlaw have focused on innovation designed to enable such self-protection. For instance, interdisciplinary research groups have proposed “personal data vaults” to manage the emanations of sensor networks. Jonathan Zittrain’s article on “privication” proposed that the same technologies used by copyright holders to monitor or stop dissemination of works could be adopted by patients concerned about the unauthorized spread of health information.Continue reading…

Private Equity in Health Care

Frank Pasquale

As lawmakers squabble
over the “carried interest” tax rate, it’s nice to find a big picture
overview of some of the economic activity they’re discussing. I recently
read Josh Kosman’s book The
Buyout of America: How Private Equity Will Cause the Next Great Credit
, and I highly recommend it to our readers. Kosman painstakingly
the byzantine financial maneuvers behind marquee private
equity firms which bought “more than three thousand American companies
from 2000-2008.” He describes in detail how they resist transparency
(164) and “hurt their businesses competitively, limit their growth, cut
jobs without reinvesting the savings, and generate mediocre returns”
(195). The recipe for high earnings is simple: the firms “get large
fees up front and are largely divorced from their results if their
transactions fail” (195).

Like Kwak and Johnson’s account in 13 Bankers, Kosman offers
a political economy account of private equity’s favored treatment by
government. As he notes,

[F]our of the past eight Treasury Secretaries joined the
PE industry . . . . and they have significant influence in Washington.
President Bill Clinton, and both President Bushes, have also advised PE
firms or worked for their companies. . . . KKR retained former
Democratic House majority leader Richard Gephardt as a lobbyist and
hired former RNC chairman Kenneth
as head of global public affairs. (196)

Having analyzed a wide array of buyouts, Kosman concludes that “PE
firms manage their businesses to satisfy short-term greed, not for
long-term survival” (51). This is a particularly dangerous attitude in
health care, an industry too long dominated by short-run thinking.

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THCB CEO denies improper relationships, payoffs

The Health Care Blog’s Founder & CEO Matthew Holt today announced a policy of absolute transparency concerning the rash of “inappropriate relationships” apparently infecting the health care blogging community. Holt released this statement:

I can categorically deny the truth of any rumors suggesting that anything inappropriate has been going on in the relationships between myself and any THCB staff members. While anonymous contributors may have uploaded perhaps unseemly photographic evidence to Facebook of such a relationship, I’m here to stamp out any rumors that the employee concerned was getting more than special treatment in other areas. I’d also like to state for the record that he is still on the THCB staff, and also that any treats he receives around the neighborhood are direct gifts from the giftees concerned over which I have no influence, and I am not paying off Maria at the Java House for her bacon treats.

Matthew Charley

Reached while sneaking off early on a Friday to coach Little League, THCB Managing Editor John Irvine was said to be quote “Extremely relieved” that Holt was not having any inappropriate relationships with staff members, as “there aren’t any other staff other than me!” and he “didn’t think I’d enjoy it very much."

Upon being informed that apparently other inappropriate relationships have led to large pay-offs and bonuses, Irvine changed his tune somewhat and started inquiring exactly what level of inappropriateness he’d have to put up with, and how big the bonuses were.

The Messy Business of Transparency

Picture 120President Obama’s latest plan for health reform brought a flurry of commentary in the last two days; including divergent views on whether his commitment to “transparency” is helping or hurting the process. Yesterday, the Los Angeles Times blamed the current “healthcare backlash” on Obama’s insistence that the messy business of hashing out health reform be done in Congress, not behind closed doors in the Oval Office. In the L.A. Times’ view, there’s been too much transparency:

“By leaving the overhaul in the hands of Congress, [Obama] has given the public a full view of how lawmakers do business. The result is an anti-Washington mood that Republicans have tapped into.”

Meanwhile, the House GOP leader John Boehner, calls the Obama plan—introduced yesterday on the eve of the “bipartisan” health summit—a “Democrats-only backroom deal” that “doubles down on the same failed approach that will drive up premiums, destroy jobs, raise taxes, and slash Medicare benefits.” In the Republican’s view of things, there’s been too little transparency in the health reform process.

So which is it: Back-room dealing or a too-public view of the dirty business of lawmaking?

At the very beginning of the health reform process, the Obama administration made a conscious decision not to repeat the mistakes that doomed Bill and Hillary Clinton’s plan for universal coverage in 1993. The consensus was that the Clinton plan ultimately failed because the bulk of the planning went on behind closed doors—Congress and the American people felt locked out and were blindsided by the cost of the proposal. “With a task force that operated largely in secret, the first lady drew up a detailed and complicated plan that met with fierce opposition by the health care industry and Republicans before it ultimately sank of its own weight in a Democratic Congress,” writes Peter Baker in the New York Times.

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An Open Letter to Speaker Pelosi from C-SPAN Founder Brian Lamb


Dear Speaker Pelosi:

As your respective chambers work to reconcile the differences between the House and Senate health care bills, C-SPAN requests that you open all important negotiations, including any conference committee meetings, to electronic media coverage.

The C-SPAN networks will commit the necessary resources to covering all of these sessions LIVE and in their entirety. We will also, as we willingly do each day, provide C-SPAN’s multi-camera coverage to any interested member of the Capitol Hill broadcast pool.Continue reading…


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