Redefining Transparency: Fair Trade for Healthcare

Even if one is highly ethical, it's difficult to build trust if one isn't transparent. It's hard to imagine any industry more opaque than healthcare and certainly none that are anywhere close to healthcare's size. Many doctors lament anti-science forces impairing public health through bogus health claims, however the industry’s lack of transparency hasn't engendered trust.?In a recent livecast, Zubin Damania (aka "ZDoggMD") took on the ethics of Health 3.0. [For those of you not following him on Facebook, do so now. Among other things, he defines Health 3.0 as a repudiation of the two prior eras of healthcare that have failed us.]

Perhaps we could accept opacity if our industry was tucked away in purely private business transactions. However, there is no more human (and consequential in terms of life and death) enterprise than the delivery of care. Further, healthcare consumes the largest portion of federal and state budgets (where transparency should be a given). Worse yet, it has devastated retirement nest eggs, caused the current middle class economic depression and is turning millennials into indentured servants to the healthcare industry. There's no way to restore the American Dream that has been lost for much of the country without transparency. However, price transparency is just one component of an ethical and transparent industry that we deserve given the incredible talent, smarts and passion (not to mention money) we pour into healthcare.?

To date, if there was any transparency in healthcare, it was around price. Transparency 1.0 was limited. Back in the day, there was a direct relationship between individuals and their doctors where cash was exchanged in a transparent manner (see data visualization here?to see how high that percentage was in the 60's and 70's). That was good. However, patients were largely kept in the dark by the medical establishment on clinical matters. Transparency 2.0 wasn't much better. In fact, the Gordian Knot designed by Rube Goldberg we call the claims processing system is as unexplainable as the exotic financial instruments that led to the economic collapse of 2008. As bad as that collapse was, it passed. In contrast, an ongoing financial disaster persists to this day due to healthcare. So-called "transparency solutions" are available only to a small fraction of the population (employees of some large employers). I've been told by benefits consultants that 2% is the typical percentage of employees who use them when available. Even then, learning what the best bad deal is with no guarantee you'll get it isn't exactly helpful.?

Transparency 3.0

Study after study shows how the biggest factor, by far, driving why the U.S. outspends every other country in the world is simply the price. I'm all for solving healthcare's most vexing problem (pricing). In fact, two of the first areas of the Health Rosetta that were built were transparent open networks and transparent pharmacy benefits. Those are a tremendous improvement over the horrific status quo, however that doesn’t address the totality of necessary transparency for a highly functioning health ecosystem.

We must go beyond that to have a fair and ethical market where all parties are treated fairly. As we work on the LEED-like certification for healthcare, another analogy has come up -- Fair Trade. If you've ever bought Fair Trade coffee, you may know that part of that seal is that all parties to that coffee are part of a fair trade. People have voted with their pocketbooks that they aren't interested in buying a product produced by child or slave labor or has harmful environmental side effects. While no analogy is perfect, I draw from those experiences as I propose something similar to Fair Trade when it comes to healthcare transparency.

I would propose that an ethical and transparent Health 3.0 offering in healthcare would embed the following:?

• Visible prices: Of course, a price should be readily available without some kind of special subscription to a service. We get that everywhere but healthcare for some reason. There are efforts to get price transparency to be the law of the land. For example, a whistleblower ex-hospital CEO has already gotten over 100,000 people to sign a petition to end predatory pricing. Hospitals, physicians and labs should have continued freedom to set their own prices, but predatory pricing — a different rate for each patient isn't in line with the "Fair Trade" approach. Until the time comes when a law passes, forward-looking organizations can gain a marketing advantage by pursuing transparent open networks (TON). In TONs, healthcare transactions could operate like every other part of the economy.?Single pricing (for all purchasers) is a subtle, but critical, part of making healthcare functional.?Not?tackling this would be one of the biggest mistakes we could make.?Practically speaking, this can be done market by market unless states or the federal government completely took over pricing -- possible but unlikely in the near-term.
• Bundled prices for conditions (not just procedures): Imagine buying a car and getting a bill for the transmission six months later. You'd be livid yet this sort of thing happens all the time in the healthcare industry. A transparent price must include the full bundle of services that wrap around it. This is the norm for transparent open networks. Modern practices are embracing this as parts of programs that compress or eliminate non-value-add claims overhead. As this orthopedic surgeon and Chair of Surgery & Perioperative Care at The University of Texas at Austin Dell Medical School, Kevin Bozic outlined in this talk, a "great outcome" on the wrong treatment can do more harm than good. Note: Not every last area of healthcare will fit into a bundle. However, it's broader than you might imagine. For example, the University of Oklahoma has an all-in bundle for diabetes management (for different severity levels).
• Safety data: Data outlined in Dr. Marty Makary's Unaccountable book is?available through vendors such as Pascal Metrics. Safety culture is very revealing of health outcomes. For example, having nurses answer questions such as “would I have a family member have a procedure in my hospital?” is very predictive of safety. A great price in an unsafe environment isn't a great deal. This is is critical given that preventable medical errors cause serious harm in millions of people per year (10,000 per day) and preventable deaths are reported to be the third leading cause of death in America according to a recent BMJ article. Often this reveals underlying causes such as nurse understaffing. Further, transparency on surgery volume is strongly correlated with safety and positive outcomes.
• Staff treatment: How staff is treated. Just as you wouldn’t want to buy a product that was created by child/slave labor, we wouldn’t want care from an organization that is abusing their doctors, nurses and other caregivers that is leading to record levels of suicide and burnout. As I wrote about earlier, the Lancet reported that outcomes are correlated to how well a care team is treated by their organization. How could it not be correlated?
• Ethics-based organization: Perhaps difficult to measure in black and white terms but should be achievable. Two examples come to mind. First is that there is a focus on patient-reported outcomes (see further explanation in Dr. Bozic's talk). Forward-looking organizations such as Virginia Mason have been candid that, at one time, 90% of their spinal procedures were of no help. While some talk about fears of rationing care, it’s self-evident that the volume-driven reimbursement system rations choices – i.e., patients often aren’t told of alternatives to expensive and overused treatments and tests. Top-performing value-based primary care organizations tell us that patients virtually always choose the least invasive option first -- but only if told about those options. Second is ethical business practices. Sadly,?Mafioso-like anti-competitive practices by incumbent health systems is something I hear examples of almost daily (e.g., intimidating doctors forcing them into a relationship with a hospital) -- the stories I hear most?frequently are?abuses from tax-exempt hospital executives acting with impunity.
• Data liquidity: Care teams do their best work when they have the most complete view of their patient's health status. If the package of services doesn't include getting one's data out of a provider system, there is an increased risk of medical harm from incomplete information. It should be simple for a patient to get information into a secure, patient-controlled data repository. Data liquidity doesn't end with the clinical side. It also includes complete claims data (for the wonky types, it's X12 835 & 837 claims data) that should be fully available to the true "payors" of healthcare (employers & unions).

Please poke holes in what I outlined above. Better yet, propose (in the comments below) what would address those holes or if there's a better way of addressing the issue.?

Growing legal exposure pushing healthcare purchasers towards transparency

Employer passivity on healthcare purchasing is waning due to a few factors:

1. As the second biggest cost after wages, smart employers are no longer being hoodwinked by the tricks the healthcare industry plays to redistribute profits from high-productivity companies to the low-productivity healthcare industry.
2. High deductible health plans make the already-specious argument that health benefits spending is the employers' money moot. One rule clarification would unleash the same level of scrutiny on healthcare spending that exists for retirement benefits. Employers don't want to get caught flat-footed for when this inevitable day comes.?
3. Increasingly, companies and benefits leaders are in the crosshairs legally around breach of fiduciary duty by not more closely managing their benefits (wise ones are explicitly hiring healthcare fiduciaries). With scrutiny will come a natural evolution towards transparency as has happened with retirement benefits (the other items regulated under ERISA).

The day will come when it’s expected by employees that their employer is only offering health and wellness benefits that are transparent across all of the dimensions outlined above.?

Power at the grassroots level by nurses and caregivers

The healthcare system has done a "terrific" job of making nurses and other caregivers feel they are powerless. Caregivers have the ability to exhibit great power and many are members of unions such as the SEIU that have collective clout. My experience has been some of the most innovative health benefits purchasers are unions. It's not surprising as they face the reality that healthcare's hyperinflation dramatically affects their wages. Smart unions such as the teachers unions in the Pittsburgh area realize they can slay the healthcare cost beast. Like teacher unions who have been on the wrong side of the negotiating table in the past, healthcare worker unions can find common cause with their management who also have a need to tame healthcare costs. Wise health system realize they have to develop population health management skills to prepare for the future.

Starting with their own clinicians and family members is a great way to learn and adopt Health 3.0 approaches. In Seattle, both Seattle Children’s and Virginia Mason have adopted value-based primary care provider, Vera Whole Health. Virginia Mason made a strategic investment in Vera as they realize organizations such as Vera represent the Health 3.0 future.?

Just as doctors are declaring their independence from the healthcare status quo, so too should caregivers of all types. ZDoggMD's "Zpac" are a growing force to be reckoned with. If their employers save money on health benefits, those are resources that would be better spent addressing under-staffing and/or compensating the caregivers more. Further, with millennials now being the largest chunk of the workforce (and 75% of the workforce by 2025), it's imperative they offer benefits aligned with their values. Millennials have been the early adopters of products certified by organizations such as Fair Trade. Attracting and retaining employees will be one of the reasons employers adopt the equivalent of Fair Trade in healthcare.?

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Dave Chase is the author of the forthcoming book, “CEO's Guide to Restoring the American Dream - How to deliver world class healthcare to your employees at half the cost.” His recent TED talk was entitled "Healthcare stole the American Dream -- here's how we take it back."