fah hospital policy blog

Perspectives on health policy affecting America’s hospitals and the patients we serve.

Category Archives: transparency

Chip Kahn Q&A with Nathaniel Weixel of Bloomberg BNA

May 30, 2014 | FAH Hospital Policy Blog

Category: Media, Transparency

The FAH has been very active in the past few weeks, as current FAH Chairman David T. Vandewater (President and CEO of Ardent Health Systems) and FAH Chair-Elect Keith B. Pitts (Vice Chairman of Tenet Healthcare Corporation) participated individually in separate panel discussions. Both of these panels were based primarily upon critical policy journal articles addressing hospital realignment and market competition and authored by several academicians also participating as panelists.

Additionally, FAH President and CEO Chip Kahn recently was interviewed for a Q&A feature article by reporter Nathaniel Weixel of Bloomberg BNA. The Q&A, published today, covers a broad number of pertinent topics in health care including SGR reform, mounting cuts to hospitals and transparency.

When asked about his biggest concern for the coming year, Kahn emphasized “enough is enough” when it comes to hospital cuts:

“We support SGR reform. We think it would be good policy. . . All that being said, enough is enough from a hospital standpoint. Since [the Affordable Care Act was passed] it’s now up to almost $122 billion that’s been taken from hospitals over 10 years. We gave at the office…In terms of pay-fors, they need to look elsewhere. We believe that further cuts to hospitals would be completely counterproductive and not in the interest of access to services of Medicare beneficiaries at this point”

In response to a question about paying for SGR reform, Kahn continued to highlight that cutting hospital payments to pay for SGR reform is bad policy that punishes hospitals for a problem they did not create:

“Personally, I think the notion of robbing Peter to pay Paul to fund programs is a problem and not good public policy. . . This problem of (the) SGR wasn’t created by hospitals, home health or [Medicare] Part D. It was created by Congress.

Finally, when asked about transparency and hospital charges, Kahn supported transparency but cautioned that releasing information that is not useful to the consumer is counter-productive to the goal of transparency, a distinction that the FAH reiterated recently in a letter to the Federal Trade Commission.

“Transparency is a good thing. I think transparency needs to be designed in a way that’s actually useful for patients to make decisions or for their caregivers. I think you need information that can be digested, and releasing [hospital] chargemaster data, or even releasing physician data, I don’t know how helpful that is for any particular consumer.”

The FAH is grateful for having multiple opportunities to publicly present the perspective of the investor-owned hospital community when it comes to health care policy, and we are hopeful that these perspectives will contribute to a more comprehensive understanding of the landscape in which hospitals must operate.

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The FAH Weighs in on Health Care and Competition

May 29, 2014 | FAH Hospital Policy Blog

Category: Realignment, Transparency, Uncategorized

This afternoon, the National Academy of Social Insurance (NASI) hosted a panel featuring Keith Pitts, Vice Chairman of Tenet Healthcare Corporation and Chair-Elect of the Board of Directors of the Federation of American Hospitals. Pitts is the second FAH representative in just two weeks to have the opportunity to speak on a panel focusing on the important topic of competition in healthcare. The FAH is pleased that the voice of hospital systems and our esteemed leadership is included in these critical discussions.

With his extensive experience in financial and operational management of health care systems, Pitts was the only panelist with a view from inside a hospital’s doors. Hospitals are directly responsible for patient care, and as caregivers of last resort, we are reminded every day about the importance to community health care of extending and preserving access to care. This perspective is critical to better understanding the steps hospitals are taking to ensure delivery of high quality health care in the most efficient way possible.

In the evolving health care marketplace, hospital realignment often is an essential method of preserving access to care and improving health care quality and efficiency. Many of the other panelists presented only a partial picture of hospital realignment, overlooking the need to preserve access and basing presumptions and conclusions on common misconceptions and old data reflecting market conditions that were vastly different than what exists today.

Pitts painted the broader picture, emphasizing that a conversation surveying the last few decades is ineffective in understanding the current health care marketplace we are experiencing today. “The interesting thing about this discussion looking at the last 20 or 30 years, we are seeing a markedly different environment now…. We’re in a different world today. When we think about policy we can’t always use history to determine what we should do moving forward,” Pitts said.

The changing health care market landscape and is shifting towards a model of more integrated and coordinated care. Hospitals operate in an environment where dramatic public sector reductions in hospital funding make it difficult to adjust to this changing delivery system while investing in costly but important health IT systems. The reality is that hospitals must adapt to survive and continue serving their patients. Consolidation, mergers and other realignments can help achieve lower costs while increasing quality and improving access to care.

Earlier this year, the FAH commissioned a comprehensive review from the Center for Healthcare Economics and Policy to examine contemporary hospital consolidation, which reviewed 75 studies spanning the years 1996-2013, as well as 36 primary sources. The study found that the biased perception of hospital realignment stems from 20 year old data, and that current realignments provide significant benefits for patients and communities, including:

* Preserved and expanded access to essential medical care;

* Improved service offerings and quality of care;

* Sustained and necessary investment in technology, facilities and health IT;

* Sensible reduction in excess capacity; and,

* More competitive health care markets.

The report also found no consistent statistical relationship between realignment and hospital price increases and that, in some cases, without realignment there would be disruptions in emergency services, other service lapses and hospital closures.

The Federal Trade Commission (FTC) is active in reviewing mergers that could potentially have anticompetitive implications, yet the vast majority of mergers have been permitted over the last five years on the basis that they do not impede market competition. However, mergers are not rubber stamped. In fact, the Federal Trade Commission has successfully challenged recent mergers. Two such examples include:

* In April 2014, a federal appeals court ordered the unwinding of a 2010 merger between ProMedica, a nonprofit health-care system based in Toledo, Ohio, and St. Luke’s, an Ohio community hospital. The court agreed with the FTC that ProMedica’s dominance in the relevant markets would give it leverage to demand higher rates.

* In January 2014, a federal district court ordered the unwinding of St. Luke’s Health System’s 2012 acquisition of Saltzer Medical Group, Idaho’s largest independent, multi-specialty physician practice group.

In the Idaho case, the court recognized that the health care landscape is changing and suggested that although long-standing antitrust law prevented the court from deciding in favor of the merger, the best result in this case would be to allow the merger to proceed while monitoring the result.

The court’s message is clear: the new world order in health care requires greater flexibility to test new care delivery models to meet the needs of the current marketplace. Indeed, it may be prudent to take a cue from the court in St. Luke’s/Saltzer and allow mergers to proceed, while monitoring them for anti-competitive results. Wholesale changes in federal antitrust enforcement policy are not appropriate at this time.

In a further step acknowledging the changing landscape, the FTC recently held a comprehensive public workshop, Examining Health Care Competition, to solicit the views of policymakers and the public. The FAH recently sent a letter in response to this workshop, to outline our perspectives and flag the aforementioned study for the FTC’s review.

As the health care landscape continues to evolve, it is important to present the topic of hospital realignment and health care competition more holistically and to address the total landscape, rather than just discussing pricing impact without the broader context of why realignments are necessary in today’s marketplace.

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FAH Outlines Recommendations on Price & Quality Transparency

May 29, 2014 | FAH Hospital Policy Blog

Category: Transparency

A letter to the Federal Trade Commission (FTC), recently sent from the FAH, addressed two issues of crucial importance when building efficient and competitive markets: price and quality transparency. Price Transparency. Price transparency is necessary in order for patients to easily determine the cost of their premiums, deductibles, copayments and non-covered services (“Out-of-Pocket Costs”) prior to purchasing health insurance coverage and receiving medical services. Our letter outlines five key principles from the Healthcare Financial Management Association Price Transparency Task Force that the FAH believes are critical to defining price transparency. Under these principles, price transparency should:

Enable patients to make informed price comparisons and make decisions based off which providers offer them the most value;

Be easy to use and communicate;

Be paired with information that defines the value of service for the consumer;

Provide patients with information needed to understand total price of their care and what is included in that price; and,

Require commitment and active participation of all stakeholders.

Unfortunately, hospital price transparency can be complicated and is often made worse, as a previous blog outlines, when the different terms used to discuss hospital financing are applied incorrectly. For example, “payments,” “costs,” “charges,” and “prices” are separate terms with entirely separate definitions. Unfortunately, these words are often – and inaccurately – used interchangeably.

The focus placed on hospitals charges has been the root of much confusion. If there is one critical takeaway, it is this: listed charges have little relevancy to most patients, as charges and the amount patients are expected to pay are often much different. Clear definitions and understanding of the difference between cost, charge and payment are vital to developing a transparent pricing structure in health care.

Further, price transparency cannot be the sole responsibility of providers. To ensure that all patients understand the care they receive, all stakeholders must be accountable in clarifying for consumers the breakdown of care provided. For consumers with health insurance, insurers should be the consumer’s point of contact for all information related to insurance coverage and payment for medical services, including Out-of-Pocket Costs, coverage, benefits, providers, insurer ratings and reliability of claims payments. This is especially true when medical services are furnished by multiple providers, which makes understanding the costs of care difficult. Insurers should serve as consumers’ source for “one-stop” shopping.

In the discussion on price transparency there is one important item of note. While the FAH supports price transparency, we do not believe that negotiated provider network payment rates should be disclosed due to anticompetitive concerns. As recognized by economists and the FTC, transparency of provider network rates could inflate prices, incentivizing providers with lower price structures to raise their prices to match higher rates in the same market.

Quality Transparency

Inherent in effective price transparency is the need to pair price data with meaningful quality data through public reporting of performance. Quality transparency will give insight into the value of care a patient receives. As the FAH’s letter to the FTC outlines, there have been significant strides in developing and implementing quality reporting programs over the last decade, but the challenges that remain are equally significant. The FTC should assess these issues as it examines quality measures.

The FAH outlines four principles that it urges the FTC to follow when it comes to examining quality measurement:

Measurement and reporting should be meaningful and actionable;

Measure development, reporting and endorsement should be consensus-based and include a broad range of important stakeholders in these processes;

Measurement and performance reporting should be based on consistency of measurement across providers and settings; and,

Public reports of provider performance should have purpose, transparency and validity.

In addition to these principles, the FAH urges the FTC to recognize the ongoing limitations in measuring and reporting quality performance that exist at this point in the quality enterprise continuum. There are a number of examples that outline the challenge in trying to measure quality during this developmental phase:

Effective methods for utilizing interoperable electronic health records (EHRs) have yet to be determined.

Although we are in the early stages of transitioning from emphasis on process measurement to outcome-based measurement to identify quality health care providers, there are not sufficient outcome-based measures to make broad determinations.

There is a time lag between organizational change, such as a merger or acquisition, and the ability to operationalize a change in quality, and sufficient time is needed after implementation before the full potential of quality improvement is achieved.

In examining how quality might be used effectively in evaluating mergers, while taking the foregoing limitations into account, we do not believe it is necessary or appropriate for the FTC to develop its own quality metrics for purposes of its oversight authority. Instead, the FTC’s oversight should be tailored to achieving the mission of the Commission using industry-accepted norms and measures.

The necessity of price and quality transparency in the health care space is clear, and both are improved for the patient when used in tandem. While there have been many important advances to achieve effective transparency, ongoing limitations necessitate caution and accuracy when evaluating quality and price transparency data to examine health care competition.

The FAH is grateful to have the opportunity to outline its recommendations to the FTC during a crucial time as health care transparency tools swiftly evolve.

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FAH Weighs in with Antitrust Agency on Health Care Competition and Transparency

May 22, 2014 | FAH Hospital Policy Blog

Category: Transparency

The FAH recently attended the Federal Trade Commission’s (FTC) public workshop, Examining Health Care Competition, and commends the FTC for its leadership in exploring an important topic during a time when health care delivery is adapting to critical changes and new structures. Last week, in response to this workshop, the FAH submitted a letter to the FTC to contribute our views on competition in the healthcare marketplace and the role that hospitals play.

In our letter, the FAH addresses three main issues:

Price transparency;

Quality transparency; and,

Corporate practice of medicine laws.

The first two of these topics were focal points of the FTC’s workshop, and we believe the third is an issue the FTC should study more closely due to its anticompetitive effects.

In our letter, we also flagged a recently published study for the FTC’s attention. This comprehensive analysis, commissioned by the FAH from the Center for Healthcare Economics and Policy, reviewed 75 studies spanning the years 1996-2013, as well as 36 primary sources. This analysis found that hospital realignment can result in substantial benefits for patients and communities, including preservation and expansion of access to care and increased investment in Health IT.

Given these findings, it is important that the FTC take into consideration how hospital realignments benefit patients and communities. It should also consider the fact that a rise in mergers, consolidation and other realignments has not led to any statistically significant relationship with anti-competitive price increases.

We also advised the FTC that transparency in quality initiatives and hospital prices are hugely important to creating efficiently operated markets, and enable consumers to make informed choices. In our letter, the FAH outlines the principles by which price transparency should be defined industry-wide in order to disclose the most meaningful and useful information for consumers making health care decisions. The most important information for health care consumers is what their out-of-pocket costs will be.

Investor-owned hospitals welcome competition in the health care marketplace and the health care delivery changes that the market is driving in hospital operations. The FAH is grateful to have the opportunity to provide our views as the FTC continues to examine competition in health care. We look forward to discussing these issues and continuing to work with the FTC to ensure competitive health care markets that create significant benefits for patients and communities.

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