From the <strong>GIC Summer 2009 Newsletter</strong> pdf format of    fybsummer2009.pdf  PDF

Five years ago, Harvard Pilgrim published its 2004 annual report. We entitled it, "The Cost of Not Knowing," and it focused on how little information exists in the public domain concerning health care costs and quality. We argued that this lack of publicly available information was a big problem - for three reasons:

  1. There is no incentive to be the low-cost, high-quality provider of health care services, because there is no public accountability or recognition concerning cost or quality at the provider or provider group level. Low cost/high value providers get no public recognition or market benefit, and health plans like ours remain ambivalent about building select, high-value provider networks in the absence of public data that can serve as the baseline for such work.
  2. The average cost per admission for Harvard Pilgrim members using community hospitals in Massachusetts is about $4,450. The difference in cost per admission varies by 300 percent (!) - from $2,305 in the lowest cost community hospital to over $9,700 in the most expensive. These are the price differences after adjusting for the fact that some hospitals treat sicker patients - what's called their "case mix." Think of it as a positive adjustment for degree of difficulty - like in gymnastics.
  3. There are some measures of quality that are strictly personal and subjective, and there are many variables that can change from week-to-week or day-to-day. But, in terms of clinical outcomes over time, there are numerous reports and documentation that every hospital in every state has to file with the state and federal government concerning infection rates, mortality rates, complication rates, and the like for every inpatient and outpatient procedure it performs. These filings show that there is virtually no correlation between high cost and high performance. The difference in performance among community hospitals for the vast majority of procedures is very, very small, and the difference among teaching hospitals is equally small.

Today, this lack of public transparency remains almost as big a problem now as it was then. Everyone is concerned about rising costs, but there is very little consensus about why health care costs are so high.

The Commonwealth has made some minor progress in collecting and posting publicly on a state web site a small subset of inpatient and outpatient services, and public hearings are being planned for this fall on what drives the cost of health care in Massachusetts. This is progress. In addition, the Boston Globe made a lot of noise with a three part Spotlight series earlier this year on the big differences that exist in the cost of care between physicians and hospitals delivering the same service.

This is all positive, but we still have a long way to go before the price and quality of health care services is as known and as understood as the price and quality of other goods and services. And I'm not expecting every individual to shop hard for an appendectomy either. I'm more interested in having the health care industry, the media, the public policy making community, and the public in general engaged in an ongoing, informed discussion about why health care costs are high and what we can do about them. And I'd like to see those who perform well get some public recognition for their work. Under the current system, no one knows - and as a result, no one cares.

Among employers, the Massachusetts Group Insurance Commission has made more progress on this topic than most - promoting the idea of tiered physician and hospital networks for its insureds using cost and quality information to tier providers. Not surprisingly, this initiative has generated controversy, some unhappiness, and a lawsuit or two along the way. But it's also forced people to talk and to think - always a good thing.

Somehow, we need to get beyond "don't ask, don't tell" on the cost and quality of health care. I hope it's sometime soon. We need the debate, the information, and the capacity to significantly enhance our collective decision-making.

Charlie Baker is the President and CEO of Harvard Pilgrim Health Care. He also has considerable public service experience having served as the Commonwealth's Secretary of Health and Human Services and Secretary of Administration and Finance. Harvard Pilgrim has been a vocal supporter of more public reporting of health care information for the past several years. Baker writes about this, and other topics, on his blog.


This information provided by the Group Insurance Commission.