Why Transparency Is A Key To Healthcare Reform (And More)

Recently, fiercehealthcare.com identified the top healthcare trends, with considerable focus on the need for transparency in healthcare finance.  It seems no one knows the true cost of specific healthcare services and products.

Very late in my tenure as the CEO at CPES, an employee-owned company that continues to provide services to people with severe disabilities, we embraced open book management and transparency in our operations.  We were able to involve most employees in monitoring expenses and seeking new opportunities for growth, but we never knew the true cost of the services we provided.  We managed to the rate of reimbursement we ultimately negotiated, and even that was mitigated by the move to managed care-type fees.  Be we never knew what our services really cost the payer (you and me).

So it is in most of healthcare financing today.  While there are many, exciting experiments in healthcare delivery, including the migration to private, cash payments for many services, we really don’t quite know.  Our convoluted system of reimbursement resists change and besides, isn’t it unfair to expect physicians and hospital CEOs to know the true cost of their services? In the healthcare realm this is dramatically presented in Govindrajan and Ramamarti’s November 2013 Harvard Business Review article “Delivering World-Class Healthcare, Affordably.”  Even when objective analysts control for the impact of higher physician salaries in the US, many Indian hospitals are significantly less expensive to operate than their US counterparts. And with comparable healthcare quality.  If you look closely at the Indian models you will find transparency near the heart of their innovative spirit. Why? Because when everyone is involved you increase the likelihood of a great result.

Why is transparency a key to healthcare reform?

  • Transparency has a non-judgmental quality that helps to open the door, while looking at existing data and critical numbers that drive operational expenses.
  • Transparency encourages not only a company-wide effort to investigate the numbers, but invites the participation of all stakeholders, including payers and customers, in finding a solution. Everyone has the potential to benefit so why not jump in?
  • Transparency abides a spirit of innovation and new approaches that could actually improve service and product quality. Can you imagine better service and less expense for an improved product?
  • Transparency actually makes it easier to be profitable because it can lead to developing the best incentives for everyone, which improves the sustainability of the organization. The incentives are not just financial – they can also include nonfinancial achievements.
  • Transparency has the potential for wider cultural change of destructive healthcare-related habits like smoking and substance abuse.  Are you willing to pay for people who refuse treatment and then want you to pay for the results?

The last point may be where the rubber most meets the road.  Issues that seem almost too complex to address, like healthcare costs, are illusions that we have unwittingly created by force of habit over many years.  Like good therapy that is why transparency is so important – an open, nonjudgmental appraisal of the facts as a foundation for honest action in the future.