Transparency in Healthcare: The Week Ahead will Bring Unflattering Attention to Industry Shortcomings

This is going to be a big week for healthcare.

Today, the President will issue an Executive Order that requires hospitals, insurers, physicians and others in the industry to disclose the underlying costs of their services along with prices. The President is asserting authority under provisions in the 21st Century Cures Act, the Affordable Care Act, the Health Insurance Portability and Accountability Act and Employee Retirement Income Security Act and others. 86% of voters said they favor the concept but the major trade groups representing hospitals, physicians, insurers are opposed, citing added costs they’ll be forced to pass on. (Center for American Political Studies at Harvard and Harris Poll May 2019, Wall Street Journal).

Wednesday and Thursday, 20 of the 24 Democratic candidates for the White House will “debate” in Miami. At this stage in Campaign 2020, it’s essentially a race for style points to break out of the pack with primary voters and garner favor with donors. Healthcare issues will be a prominent: Medicare for All, surprise medical bills and drug prices will no doubt be popular themes.

Also Wednesday, the Senate Health, Education, Labor and Pensions (HELP) Committee will vote on the “Lower Health Care Cost Act” (S. 1895). It’s co-sponsored by the Committee Chairs Sen. Lamar Alexander (R-TN) and Sen. Patty Murray (D-WA) and includes proposed strategies in five areas: (1) ending surprise medical bills using a median benchmark and cap; (2) reducing the prices of prescription drugs; (3) improving transparency in health care; (4) improving public health; and (5) improving the exchange of health information.

While these might appear to be unrelated, they’re far from. The common theme is transparency or lack thereof.

Insiders--docs, hospitals, insurers, drug companies, device makers, post-acute operators, IT providers and suppliers—have enjoyed an industry that’s been somewhat protected from market forces. It has asserted its quality, safety, economic impact and societal value effectively for decades. Increased demand has been a constant, but unit prices for drugs, hospital stays, medical services have inexplicably risen significantly faster than economic growth and overall inflation. Details about the trading relationships between insurers, providers, suppliers, physicians have been guarded secrets. And trade groups have been frontline defenders capably asserting the unique complexity of the industry’s goods and services. That was yesterday.

Today, increased transparency is a strategic imperative for every healthcare organization. Consumers are anxious about healthcare affordability, surprise medical bills, poor service and lack of transparency about prices, business dealings and performance. Employers are frustrated by health costs that seem inexplicable and think the industry irresponsible. And consumers, employers and policy-makers are increasingly exposed to credible reports that suggest the industry’s proclamations are sometimes suspect. Just last week, for instance, we learned…

  • diagnostic errors that impact 12 million and cost $100 billion annually (AHRQ),

  • cancer drugs returned $14.50 for every $1 invested in their R&D

  • after adjusting for high cost patients attributed to accountable care organizations (Medicare Shared Savings Programs), Medicare cost savings have been negligible (Annals of Internal Medicine)

  • 80% of primary care medical residents will end up in a medical specialty due to higher income potential (“We were inspired to become primary care physicians. Now we’re reconsidering a field in crisis” (Stat)

  • The work requirement for Medicaid eligibility in Arkansas has not resulted in higher employment, the primary aim of the highly touted effort. (New England Journal of Medicine)

My Take

Transparency in healthcare is modest. Social media, academic research and media attention have chipped away at the industry’s credibility. Greater transparency is needed to restore its trust. What’s at stake is its future.

This week, we’ll hear a lot about drug prices and insurer profits. That’s just a start. Hospital prices, physician income and quality, executive compensation, board of director competencies, device-maker perks to clinicians, the accuracy of treatment decisions, the necessity of services, the true costs of R&D for novel drugs and much more will be fair game.

The implications are clear: every healthcare organization must assess the veracity of its claims and plan for heightened attention. Conducting board-level audits of an organization’s assertions is a start.

Transparency is about more than net promoter scores and star ratings. It’s deeper and more important than ever before.

Paul







P.S. I spent many years in academic medicine. The lead article in JAMA last week was “Academic Medical Centers: Too Large for Their Own Health?” by Clairborne Johnston. The University of Texas clinician raises the interesting proposition that revenue growth among the 141 AMCs has had mixed results: But does the quality of clinical service justify the 44% premium paid to AMCs over their community competitors? The bigger question in that needs attention is this: is academic medicine’s three-in-one model—teaching, research and patient care—the best way to prepare tomorrow’s workforce, or should other models be considered? Seems to me there are better ways.