Saturday, July 21, 2007

Consumer-Driven Care - Transparency

We do not have a functioning market in the true sense of the word in health care. That's a layer of transparency that's sorely needed in America.

Paul Ryan, U.S. Congressman, Wisconsin

To be transparent is to have truth as a parent.


Fifteen years ago, as chairman of a Physician Hospital Organization (PHO), I came up with the idea of offering “transparent bundled bills,” These combined hospital and physician fees for over 100 hospital procedures.

I described bundled bills in Innovation-Driven Health Care: 34 Key Concepts for Transformation (Jones and Bartlett, 2007) in chapter 28, “Meeting Demands for Knowing Hospital Costs Upfront.”

Transparent bundled bills upfront seemed like a great idea. Everybody admires “transparency,” which has been variously defined as, allowing light to pass through without interruption or distortion, obvious and easy to recognize, open and frank.

But, alas, transparency isn’t so apparent to health plans. They choose not to negotiate collectively with hospitals and doctors. HMOs prefer to deal with hospitals and doctors separately, to divide and conquer. Third parties are rarely transparent in pricing. They prefer to set prices, not to explain or justify them.

Today I received two communications.

•One was a July 19 blog, www., from a health care analyst, Brian Klepper, PhD, “Should We Have Health Care Transparency? By Whom, How?” Klepper cites a New York Times article. In it the New York Attorney General threatens to sue United Health Care for selecting physicians based on cost not quality. Ingenix, a United Health subsidiary, rates physicians based on “proprietary” software. Klepper complains any tool used to achieve transparency should be transparent as well.

Klepper endorses transparency as a tool to reform health care.

” To heal health care” he says, “we need transparency. But it should be provided by neutral organizations that don't have conflicts of interest, and assure doctors and everyone else involved in health care that the reporting will be fair and without prejudice.

Health care is too important for patients and purchasers not have objective information. Only if we get this accomplished properly can we say we've taken the first steps to really fixing America's health care system.

•The other article was a report by Merritt, Hawkins, & Associates, “Hospitals Employing Physicians in Greater Numbers: Demand Continues to Rise for Primary Care Doctors,” The report is based on over 3,000 recruiting assignments from April 1, 2006 to March 31, 2007. It says a growing number of hospitals are employing physicians. Hospitals offered employment to physicians in 43 percent of searches conducted, up from just 23 percent the prior year and 19 percent the year before that. Traditionally, physicians have practiced as independent contractors or as employees of physician-owned groups. More hospitals employing physicians signals a shift in this former practice paradigm.

“Physicians have long prized their independence,” observes Joseph Hawkins, CEO of Merritt, Hawkins & Associates, “But today more are willing to exchange independence for security and convenience of hospital employment.”

Physicians are accepting employed positions with hospitals to avoid private practice hassles -- high malpractice premiums and struggles for reimbursement. Younger physicians, Hawkins notes, don’t want to “hang up a shingle” and practice on their own. Hospitals, which went through a phase of employing mostly primary care physicians in the 1990s, now are employing both primary care doctors and specialists. Employment secures physician loyalty to hospitals. Doctor employment reduces direct competition between physicians and hospitals for medical procedures and tests.

Searches the firm conducted for general internists increased by 120 percent from 2003 to 2007. Searches for family practitioners increased by 84 percent in the same time frame while searches for pediatricians increased by 21 percent. Hawkins says more openings in primary care stem from fewer medical students entering primary care.

The report shows signing bonuses have become a standard incentive offered in 72 percent of searches Merritt, Hawkins & Associates conducted last year, up from 46 percent two years ago. Signing bonuses range from as little as $5,000 to as much as $100,000. The report may be viewed online by visiting the firm’s Web site,

What distinguishes the Merritt Hawkins report is its transparency – clear and obvious data on signing bonuses, demands for specialists, increases in demand, starting salaries commanded by various specialists. The report exemplifies the attributes of transparency -- clarity, verity, and reality.

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