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Pulling Back the Curtains

December 1, 2007
by Mark Hagland
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Quality and pricing transparency initiatives are appearing all across the country

Almost every day, new developments around quality or pricing transparency are announced or reported in healthcare. Indeed, what is coming into focus is nothing less than the start of a sea change in how the various stakeholders around healthcare — employer-purchasers, health insurers, consumers and their representatives, and provider organizations themselves — gather and share information with one another.

And what's happening is no accident. Pushed to the wall by resurgent healthcare inflation, healthcare purchasers and payers are pushing back, demanding documentation of patient care quality, along with a more rational and transparent approach to pricing, particularly in the hospital sector — in short, they are driving providers toward value-based healthcare purchasing.

To date, a small number of hospitals and other organizations have been leading the charge from within healthcare, pioneering new strategies both around quality reporting and around pricing information. Every initiative is different in content and scope, but all involve senior management and board commitment to the transparency concept, as well as enterprise-wide work to make it happen, and a tremendous amount of IT facilitation.

Pioneering transparency in Pennsylvania

No organization is farther along on the transparency path than the Geisinger Health System, the Danville, Pa.-based integrated health system that provides care to 2.5 million people in 40 counties across northeastern and central Pennsylvania. The clinician and executive leaders at Geisinger took a pioneering step in February 2006, when the organization launched its ProvenCare program, which combines elements of both quality and pricing transparency. The program began in the coronary artery bypass graft (CABG), area, but has since spread to a variety of other areas, including cataract surgery, hip replacement, angioplasty, and even management around the prescribing of erythropoietin, a biotech drug used to increase the production of red blood cells in patients with chronic anemia.

All the areas that have gone live within the ProvenCare program have followed the same basic pattern that was established with the CABG program. Given a mandate to focus on innovation as a strategic priority by the Geisinger board, several working groups fanned out to focus on CABG during 2005 and early 2006. A best-practices workgroup translated broad, evidence-based guidelines from the clinical literature into 41 discrete procedural steps that surgeons could follow during surgery; a process-of-care workgroup analyzed clinical workflow across the CABG process; and a financial workgroup, which included CFOs from the Geisinger hospitals where CABGs were performed, developed financial scenarios and a pricing plan. (Under the program, Geisinger charges a flat fee for CABG surgery, plus half the amount it has calculated as the historical cost of related care for the next 90 days. The organization absorbs any extra cost tied to extended length of stay or readmission; the price point comes out to $25,000 - $30,000.)

ProvenCare is unique thus far in combining evidence-based medicine strategies with guaranteed pricing. And what has been learned? “We've learned a lot of things, but the top-line message is, we believe that ProvenCare is a scalable method, at least within Geisinger,” says Ronald Paulus, M.D., the health system's chief technology and innovation officer. “We've applied it to different settings, from acute surgical care to a broader range of settings, including a care redesign template, data analytics, and patient activation template across all the settings.”

In terms of the IT implications of all this, Paulus says, “The main take-home is that a lot of the investments in core clinical systems, including electronic medical record, data warehouses, and data analytics, are essential. These innovations are clinically driven, and providing these effective tools and bringing them to the forefront provides for one of the core business cases for investment in those systems.”

Ken lawonn

Ken Lawonn

While Geisinger is unique so far in explicitly linking the concepts of quality and pricing transparency in a single program, industry experts say both quality and pricing transparency initiatives will sweep the industry in the next several years.

“Hospital and health system leaders need to realize this is not a passing fad,” says E. Preston Gee, senior managing director at Austin, Texas-based Phase 2 Consulting. “This has so much traction and so many groups interested in it, it simply isn't going away.”

Scott wooten

Scott Wooten

Among the trends that are dovetailing to push the transparency phenomenon along, he adds, are the emergence of consumerism, coupled with the greater financial responsibilities healthcare consumers are being required to shoulder in paying for their care; the return to healthcare cost inflation; and legislative activity all across the country, from Rhode Island to Florida to Texas to California, that is forcing providers' hands in different areas (see sidebar, “Getting Pushed by the States”).

Still, moving forward in this area is no slam dunk, experts emphasize. It involves intensive work on multiple levels and across operational areas, whether the initiative is focused on clinical or on pricing transparency; and of course, it requires very intensive IT facilitation.


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