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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.

“Those organizations that are successful have commitment to this at the very top level, and that means the board,” says David Classen, M.D., chief medical officer at the Long Beach, Calif.-based First Consulting Group, and an associate professor of medicine at the University of Utah, Salt Lake City. “Transforming a culture around safety and quality is very difficult,” adds Classen. “And the other thing is, this has to be driven by the data,” which means strong EMR and other clinical information systems, and intensive data analysis capabilities.

Pioneering on prices in Omaha

Certainly, any effort will require intensive collaboration between an organization's CIO and IT team on the one hand, and either a multidisciplinary team of clinicians (for quality transparency) or the finance team (for pricing transparency) on the other.

That has been true at the seven-hospital Alegent Health system in Omaha, Neb. Going beyond the static procedure price look-up capabilities of some hospital organizations, the folks at Alegent co-developed a tool with the Solvang, Calif.-based portals vendor Medseek that allows patients to enter information on their particular health insurers and plans and to get very specific data back on their co-pays, out-of-pocket costs, and costs to their insurers, for a range of medical and surgical procedures.

Working together has been an exciting challenge, say CFO Scott Wooten and CIO Ken Lawonn. To date, virtually all the larger health insurers are now participating in the program, Wooten says, which means that 65-70 percent of health plan enrollees in the Omaha metro area can use the portal to calculate their financial responsibility for common procedures. And about 25,000 out-of-pocket estimates have been made to date using the tool. Still, CIOs should understand that, “This is not a turnkey type of solution,” Lawonn says. “Even though we worked with Medseek Inc. to (develop) this, it required lot of internal development work to get it fully implemented.”

And while Alegent has been far out in the lead in terms of creating an interactive pricing transparency tool, one of its two corporate co-sponsoring organizations is also moving forward on pricing transparency. Alegent is co-sponsored by the Denver-based Catholic Health Initiatives (CHI) system and by the Omaha-based Immanuel Health Systems (a Lutheran system), with the two systems essentially co-owning Alegent. CHI, with 73 hospitals in 19 states, is making national inroads with its broad-based pricing transparency initiative, one that first went live in several of its hospitals in March. The initiative is gradually being rolled out across all 73 facilities in the CHI system, with about 15 hospitals live as of press time, says Peter Savini, vice president, revenue cycle management.

According to the Exton, Pa.-based Savini, senior executives at CHI's corporate headquarters decided back in early 2006 that it was time to explore pricing transparency, and set in motion a series of developments that led to the current program's rollout.

The result is that patients planning for treatment at any of the hospitals that have gone live can go onto those hospitals' Web sites and get preliminary information regarding charges and individual patient responsibility for procedures; they are then guided to contact the individual hospital's finance department to learn more details and to receive financial counseling. The software that CHI is using was developed by Commerce City, Colo.-based Financial Healthcare Systems (FHS), and is a Web-based, scalable solution. The strategy, Savini says, is for the tool to compel patient-financial counseling communications and interactions, rather than to be used as a standalone application.

Putting it all together in Wisconsin

While individual hospitals and some owned hospital systems, such as Geisinger and CHI, are developing quality and pricing transparency programs, larger organizations are moving forward as well. No association is farther along than the Wisconsin Hospital Association (WHA). The Madison-based hospital group has developed two transparency programs, one for quality and one for pricing, both of which all its member hospitals are participating in. CheckPoint, the quality transparency program, has been live since March 2004, while PricePoint has been live for just over two years.


Dana richardson, r.n.

Dana Richardson, R.N.


The results of putting the quality data out on the association's Web site? There has been dramatic improvement in clinical outcomes across a wide range of clinical areas reported on, including heart failure care, smoking cessation counseling, and pneumonia treatment, reports Dana Richardson, R.N., M.H.A., vice president of quality initiatives for the WHA. To cite just one example, the administration of pneumovax, a vaccination to prevent pneumonia in high-risk patients, has risen from 47 percent three years ago to 77 percent statewide. “When you report things, particularly when you do public reporting, it forces a conversation around what we are doing well, and what areas we need to continue to work on,” she says.

Quality leaders and CIOs at WHA member hospitals are enthusiastic about the program, despite the operational and IT challenges it has posed. At the three-hospital, 30-clinic Aspirus Inc. in Wausau, Wis., Jeanne Scinto, the system's vice president, corporate quality services and patient safety officer, and Jerry Mourey, vice president of IT and CIO, agree that participating in the CheckPoint and PricePoint programs has been beneficial for their health system, and furthermore, is what healthcare purchasers, and increasingly consumers, want from providers.

The data challenges can be daunting at times, they concede. Their system, for example, has a core EMR, but does not yet have the robust kind of data warehouse that would optimize the data collection and reporting required. “CIOs should understand that we on the quality side are asking for systems that can help us get data in real time and decrease extraction requirements,” Scinto says, “not only because of reimbursement impact, but also because of public perception impact.”

Early pioneers share their wisdom

Clinician and IT leaders at pioneering hospital organizations say it will take years for the industry to fully develop the transparency tools that will satisfy the growing needs of purchasers, payers, and consumers. And that includes the clinical information systems that will provide the data and information backbone for such efforts.

At Intermountain Healthcare in Salt Lake City, for example, the earliest foundations for an industry-leading clinical information system began in the 1970s, notes Peter Haug, M.D., director of the Homer Warner Center for Informatics Research and a senior informaticist for the integrated delivery system. The key innovation that took place at Intermountain decades ago, he says, was a focus on clinical decision support and on support of clinicians in general, rather than on billing functions, as was the norm in early IS development. “We wouldn't have built the infrastructure we did if decision support hadn't been the focus,” he says.

As a result of their decades of work, Intermountain's leaders have created a system that is supporting a wealth of clinical outcomes reporting, data analysis, and clinical care improvement, and has won the organization numerous awards.

And John Haughom, M.D., senior vice president for clinical quality and patient safety at the six-hospital PeaceHealth system based in Bellevue, Wash., adds that in addition to building the needed infrastructure for transparency facilitation, pioneer organizations like his (PeaceHealth has put a wide range of clinical outcomes on its Web site for public review) are learning that, “How you communicate this kind of information to a lay public in ways truly useful to them is a very hard thing to do.”

Nevertheless, he says, the aging baby boomers are going to be demanding more and more information about quality and pricing, “They'll vote with their feet.” In other words, the time is now to get onto the path towards transparency, or lose market share and public confidence down the road.

Mark Hagland is a contributing writer based in Chicago.

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