Newtown, CT – February 10, 2012
Over ten years ago, the Nobel Prize in Economics was awarded for work done on information asymmetries, a topic that was first brought to the attention of health care industry leaders in the 1960s by Kenneth Arrow – and fifty years later we continue to suffer from information asymmetries in healthcare, mostly due to the continued opacity in price and quality. In a recent blog post, Uwe Reinhardt highlights one tool that enables consumers some insights on price. Unfortunately, we're still seemingly years away from truly freeing up the stores of data that are locked in physician offices, hospitals and health plans, and turning them into useable and valuable information. Regi Herzlinger has long argued for a FASB/SEC-like body in healthcare that would enforce the reporting of financial and quality data in a timely and meaningful way. After all, if tens of thousands of companies can do this every quarter, why can't the few thousand in healthcare get it done? A recent GAO report highlights the massive variation in implantable defibrillators and other medical device costs from hospital to hospital, all due to lack of price transparency. Similarly, a NEJM paper points to the variation in Part D spending due to overuse of brand name drugs in certain regions. And it's just as bad when it comes to clinical quality. The Netherlands report progress on bundled payment for chronic care, but admit the immense difficulty of getting systematic reports on quality from the newly formed care groups. We've experienced the same in many of our pilot implementations – getting data out of clinical record systems and plan databases is far far tougher than it should be. Why? Because there simply is no compelling reason for those who hold the information to free it up.
What this means to you? Markets can only work efficiently when those who purchase services and products – either directly or indirectly – have access to as much information as those who are selling the services and products. The Dutch don't yet know if the new care groups that have formed to manage patients with chronic conditions will yield better results. They could, if they had mandated reporting from clinical systems. Employees and employers simply don't know about the variation in implantable devices because the plans don't transparently show the components of the hospital bill. They could if they demanded it. Providers that are trying to improve their effectiveness and efficiency in delivering care don't know what happens outside their walls, including how much care is consumed post-discharge, or how much a brand medication costs relative to a generic, because plans simply don't provide those data in a timely and meaningful way. The hoarding of information and the opacity of markets create massive inefficiencies that many are benefiting from. It doesn't have to be this way. Today we release a report on the importance of certain "engines" that can better organize and feed information back to providers and the market. They exist and can be deployed, but likely won't be by the agents of the status quo. Like cockroaches, they do better when the lights are off. However, cockroaches scurry when the lights get turned on. Time for all of us to turn on those lights.
Francois de Brantes
Health Care Incentives Improvement Institute, Inc.