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Voices on Hospitals: Cost Transparency and Keeping Cost Reasonable

HHRI 'Downstream' 2014In early 2013, I developed an infographic to help ‘mask the complexity’ of our complicated healthcare ‘system.’ The infographic portrays an overview of ‘Our Health Care River’ that illustrates how upstream activity can adversely impact what happens downstream.

We all know the health insurance premiums we pay are nothing more than a derivative of healthcare costs plus administration fees. Employers have spent enormous energy, time and money, downstream trying to ‘fix’ the symptoms of major pollutants found upstream, as depicted in ‘Our Health Care River.’ Major ‘chemicals’ found upstream include a ‘Fragmented Delivery System‘ and ‘Unhealthy Lifestyles.’

Year-after-year, employers tweak their health plans to keep them affordable. They do this by increasing deductibles, out-of-pocket maximums, office and Rx copayments, employee contributions, limiting provider networks, etc. However, we can only do so much downstream because combating just the symptoms of the core problem will only prolong the annual frustrations that we all will continue to face.

Below are the final two performance indicators on hospitals as perceived by employers: ‘Cost Transparency’ and ‘Keeping Cost Reasonable.’

Indicator #11: Cost Transparency

How can patients and payers discern the ‘value of care’ delivered when cost is not commonly known at the time the procedure is being delivered? For ‘value’ to be accurately determined, providers must measure costs at the medical condition level, which requires a true understanding of all the resources used in the patient’s care.

By having this information, the cost of providing care to a patient per episode-of-care can be compared to the outcomes achieved for that particular condition. It must begin with understanding the true cost of care. The transparency of this cost to the public is crucial.

Statewide, Iowa employers rated hospitals a score of 5.8 on a 10-point scale. In other words, employers gave hospitals an un-weighted ‘D+’ on cost transparency. When segmented into five regions using size-weighted scores, three regions ‘fail’ while the southwest region (5.1 score) was a whisker away from failing. Only the northwest region was safely graded above failing, grading in at a ‘mid-D.’

Regional - Cost Transparency Map-Master


Indicator #12: Keeping Cost Reasonable

Our 12th indicator – ‘Keeping Cost Reasonable’ – is a cousin to ‘Cost Transparency.’ This indicator is extremely frustrating to Iowa employers and earned the lowest grade when compared to the other 11 performance indicators. Increasing value requires either improving the outcomes without raising costs or lowering costs without compromising outcomes. From our past 15 years of research, Iowa employers have seen health insurance premiums increase by 171 percent for single coverage and 158 percent for family – clearly an unsustainable pace.

Statewide, Iowa hospitals received an abysmal score of 5.1, or a grade of ‘D-minus’ for their efforts on keeping costs reasonable. When segmented into five regions using size-weighted scores, four regions ‘fail’ while only the northwest region received a ‘mid-D’ grade. Polk County hospitals received an extremely low score of 3.4, based on 144 employers within that county.

Regional - Keeping Cost Reasonable Map-Master


Within their respective communities, employers must lead the discussion about healthcare ‘value’ – for one major reason: they own the problem. The path that we are all on is unsustainable AND unacceptable. Unilaterally, providers are unable to develop ‘solutions’ to the cost problem. Employers must be part of the solution by moving upstream to help find approaches to prevent the harmful ‘chemicals’ from polluting ‘Our Health Care River.’

To learn more, we invite you to download our free white paper: ‘Voices for Value: Iowa Employer Perceptions of the Iowa Healthcare Provider Community.’ This document provides a comprehensive overview on our current status and establishes a baseline in which to measure future changes made in Iowa’s healthcare system.

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Voices on Hospitals: Transparency in Medical Outcomes

Time To ImproveIn my mind, the Holy Grail of healthcare is having information on each provider’s medical outcomes – in other words, having transparent outcomes.

How many of us desire to use a doctor or hospital who demonstrates marginal or poor outcomes? No one, I’m quite sure. Yet we have little, if any, verified qualitative information that consistently benchmarks one provider with another provider for the same medical procedure within any geographical area. This is actually a great gig for those medical providers who underperform the services they are handsomely paid to deliver to patients.

Needless to say, this MUST change — and it cannot happen soon enough.

In healthcare, we know that recommended care is delivered about 55 percent of the time, yet our costs continue to rise despite the poor outcomes delivered. Why does this happen? Because the medical ‘establishment’ is much louder (and active) in Washington D.C. than the majority of us who innocently assume that others have our best interest in mind.

Since a majority of healthcare providers fail to track outcomes or cost by medical condition, it’s imperative that a systematic measurement process is established to improve healthcare outcomes. During those times when measurement does occur, they’re typically easier process measurements that determine levels of compliance with practice guidelines. Unfortunately, these measurements may not adequately address the quality metrics needed to advance “value” in healthcare. Performing these measurements serve nothing more than a mirage of what we REALLY desire to have – improved medical outcomes.

Indicator #10: Transparency in Medical Outcomes

The jig is up. Iowa employers have sounded off about how they view hospitals regarding transparency in medical outcomes. Statewide, Iowa hospitals received an anemic score of 6.1, or a grade of ‘C-minus’ for their efforts on being transparent with their outcomes. When segmented into five regions using size-weighted scores, four regions ‘fail’ while only the northwest region received a ‘high-D’ grade.

Polk County hospitals, graded by 144 employers, received a score of 4.3 (failing), while Johnson County (home of Iowa City) received a 5.8 score, or ‘high-D’ grade. A few other notable counties with large populations include Linn County (5.6) and Dubuque County (4.8), grades of ‘D’ and ‘F’ respectively.

Regional - Transparency in Medical Outcomes Map-Master

According to Michael E. Porter and Thomas H. Lee, M.D. of Harvard, “The only true measures of quality are the outcomes that matter to patients. And when those outcomes are collected and reported publicly, providers face tremendous pressure – and strong incentives – to improve and to adopt best practices, with resulting improvements in outcomes.”

Iowa employers have found their voice, now it is time to raise it to unprecedented decibels.

In next week’s blog, we’ll review how Iowa employers graded hospitals on our final two performance indicators: ‘Cost Transparency’ and ‘Keeping Cost Reasonable.’

To learn more, we invite you to subscribe to our blog.

Voices on Hospitals: Ability to Engage Patients and Focus on Wellness & Health Promotion

Healthy Not UnhealthyStatistics continue to show that patients who are actively involved in their own health and healthcare achieve better outcomes and have lower health costs than those patients who are not actively engaged.

Being able to engage patients and provide wellness offerings presents a big challenge for healthcare providers. Since engagement is really about improving understanding, communication, delivery, consumption, retention and compliance, it becomes the responsibility of – everyone involved in the individual’s well-being – the patient and his or her healthcare provider.

Indicator #6: Ability to Engage Patients

‘Ability to Engage Patients’ is our sixth performance indicator. Overall, Iowa employers give statewide hospitals an un-weighted score of 6.7, or a grade of ‘C’ when assessing their ability to engage patients. When segmented into five regions using size-weighted scores, four regions received ‘D’ grades, with the southeast region scoring lowest at 5.3. The northwest region received a ‘C’ grade, outpacing the other four regions within Iowa.

Regional - Ability to Engage Patients Map-Master

Indicator #7: Focus on Wellness & Health Promotion

A major trend within the employer community, both in Iowa and nationally, is workplace health and wellness promotion. Having a healthy and productive workforce requires a renewed focus to ensure a supportive environment for the safety, physical and mental well-being of employees and family members.

The Affordable Care Act (ACA) is directing hospitals to focus on getting and keeping people well or face serious financial penalties. As a result, hospitals must look to expand the continuum of care in the future, which includes developing and maintaining wellness offerings within their communities.

Similar to ‘engaging patients,’ Iowa employers have graded statewide hospitals an identical grade of ‘C’ for this seventh performance indicator. When looking at the five regions, the map below is virtually a mirror of the map above. Despite the burgeoning wellness trend in Iowa, employers feel hospitals are falling short in providing them this important resource.

Regional - Focus on Wellness & Health Promotion County Map-Master

Being able to engage patients to be more active in their health and offering wellness resources go hand-in-hand. These two latest performance indicators reveal that improvements are, indeed, necessary. They can help hospitals identify new opportunities to provide valuable resources to community populations.

As we continue our “Voices on Hospitals” series, next week we’ll review our ‘Efficiency’ and ‘Coordination of Care’ performance indicators.

To learn more, we invite you to subscribe to our blog.