Radical Health Cost Transparency

The potential for radical health cost transparency and savings had the head of a major healthcare organization praising Obamacare recently. Jonathan Bush, Chairman and CEO of athenahealth, says that the provision for accountable care organizations (ACOs) in Obamacare is opening up a new era for health cost transparency. Bush says:

Suddenly, you see this incredible variation in cost and utilization that’s driving a lot of the absurdity of what health care costs us. It’s both exciting and depressing but at least you can see it. Once you open the wound, you can scrub it down.

With ACOs coming on line, firms like athenahealth that help doctors manage their practices can see how much money patients actually cost for the first time. They can see the large variation in the cost of services and utilization that has contributed to ever-growing healthcare costs.

ACOs can now obtain bonuses for savings they create. This is not a completely new concept. The ACO term was coined by Elliott Fisher, who is the director of Center for Health Policy and Clinical Practice at Dartmouth. These organizations are almost like an HMO but  they are provider-led organizations, not controlled by insurance. In ACOs, the participants agree to be accountable for a population of patients and agree to share that accountability, not just in terms care delivery, but also in terms of risk, costs, and utilization of services.

As a result of Obamacare, Medicare is now required to publish data on their paid claims. Imagine a healthcare company trying to save costs without knowing what the actual costs are. Now, companies like athenahealth will know for the first time how much money patients and services actually cost. The wide variation in health costs is well known, but having the data to see the variation in services and guide patients to less expensive medical care has been missing. One example is a $1,000 difference in colonoscopy costs between two institutions just one mile apart, using the same equipment.  

Bush is finding some surprises and tremendous possibilities:

The competitor has a vertical monopoly and has been able to jam the payers very successfully. They’ve also engaged in pretty hair-raising tactics. I think J.D. Rockefeller himself would have blushed if he watched these firms jam the health plans. They’ve mandated the consumer not to be able to see the difference and get any saving by going to the cheaper guy.

The big deal right now is transparency. We’ve got to be able to move patients between hospitals without them losing their records. So these one-hospital record systems have got to go away. And we’ve got to enable doctors to make money by finding the best deal for their patients. We’ve got a lot of work to do. But with accountable care organizations law, we’ve got the pieces in the puzzle that we need to make a beautiful picture come together, which is really exciting.

Click here to read more in Forbes, here to read more in the Miami Herald, and here to read about a bipartisan proposal to expand upon ACOs in the Fiscal Times.

Ginkgo Biloba Leaf Transparency image © Rémih / Wikimedia

Subscribe by email to follow the accumulating evidence and observations that shape our view of health, obesity, and policy.