|THIS WEEK IN HEALTHCARE
What happened in healthcare this week—and what we think about it.
Forcing hospitals to reveal their secretly negotiated prices
Today the Centers for Medicare and Medicaid Services (CMS) released a final rule requiring hospitals to publicly reveal the negotiated prices they charge insurers for their services, along with the discounts they’re willing to give uninsured patients. First proposed this summer as part of an executive order on healthcare transparency, the rule requires hospitals to publish, in machine-readable format, their “standard charges” for all services, including gross charges, payer-specific negotiated rates, and discounted cash prices starting in 2021. Hospitals must also publish consumer-friendly information on their websites about charges for 300 “shoppable” services, including a standard set of 70 inpatient and outpatient services. At the same time, CMS announced a new proposed rule to require group health insurance plans and health insurers to reveal the rates they negotiate, along with information on consumer cost-sharing, in the form of real-time, personalized online tools.
Secretary of Health and Human Services (HHS) Alex Azar said in a press release that “Today’s transparency announcement may be a more significant change to American healthcare markets than any other single thing we’ve done.” Industry lobbyists have already floated plans to challenge CMS’s authority to make such changes through regulation, hoping to find a sympathetic ear in the courts, which already struck down an earlier Trump administration attempt to force drug manufacturers to publicly reveal their prices. While we understand all the arguments against more transparency—patients won’t be informed shoppers, hospitals might collude to raise prices rather than lower them, there’s no true “market” in healthcare—we continue to think that pushing back against transparency and defending secret pricing is a bad look for hospitals and insurers, particularly for those who tout a nonprofit, mission-focused orientation. Transparency need not result in a race to the bottom on price, as long as hospitals are able to justify their pricing based on the benefits they deliver to consumers—quality care, superior access and service, and (most importantly) great outcomes. If “value” is defined as benefits divided by price, perhaps greater visibility of the denominator will encourage greater attention to the numerator—a welcome result for patients.
Uncovering a major new healthcare data partnership
Search engine giant Google and St. Louis, MO-based health system Ascension found themselves in the public spotlight this week, after the Wall Street Journal reported that the two are working together on a joint effort to consolidate and analyze the personal health information of more than 50M patients across 21 states. Dubbed “Project Nightingale”, the collaboration is purportedly an attempt to allow doctors and other clinicians at Ascension, the nation’s second largest hospital system, to exchange data about their patients across care settings using Google’s suite of productivity tools. It is also intended to apply Google’s artificial intelligence and machine learning technologies to Ascension’s clinical data, theoretically allowing real-time adjustments to care plans and treatment approaches. After the WSJ report, which was based on a tip from an anonymous whistleblower, both Google and Ascension rushed to reveal additional information about the project on their websites, even as regulators and lawmakers moved to launch investigations into the details of the partnership, and whether it violates Federal healthcare privacy laws. Both organizations claimed to be in compliance with those standards, and legal and privacy experts seemed to agree that the arrangement is permissible under the Health Insurance Portability and Accountability Act (HIPAA), which governs the sharing of sensitive health data.
Coming amidst larger concerns about the ethical behavior of large technology firms and increasing scrutiny of how sensitive personal data is shared and monetized, the report could be a major setback to attempts to analyze vast storehouses of clinical data to improve how care is delivered. The story raises several important questions: why did Ascension not de-identify the data before sharing it with Google? Why were patients not informed of how their personal information was being shared? And what measures are being taken to ensure that individuals’ health information doesn’t fall into unwelcome hands (such as employers or advertisers)? On one level, it’s good news that this kind of project is happening—if we want technology to improve care, then data is the fuel that makes that engine run. It’s also an indictment of the legacy electronic health record systems that they don’t enable the kind of workflow support, analytics, or data sharing that Google is now trying to layer on top of the “walled data gardens” that pervade healthcare. But we’re long overdue for a very public discussion of how technology and healthcare intersect, and what we as patients are willing to share with whom, when, and for what purposes. Here’s hoping we hear some of the healthcare luminaries Google has recently hired commenting on these important questions—soon.
Facing an earnings slump, Walgreens looks to go private
On Monday Bloomberg reported that private equity firm KKR & Co. is in the process of preparing a bid to take Walgreens Boots Alliance Inc. private. Walgreens has reportedly been exploring a leveraged buyout for several months, holding discussions with a number of large private equity firms. However, analysts have been highly skeptical of KKR’s ability to take Walgreens private on its own, given the company’s sheer size and large amount of debt, and speculate any feasible bid would require multiple sources of financing. Walgreens has recently seen its profits drop, and announced last month that it would close nearly half its in-store clinics as part of cost cutting efforts. In addition to facing new competition from disruptors like Amazon looking to enter the prescription business, the pharmacy chain has been losing ground to rival CVS Health. Just a few years ago, Walgreens seemed the more forward-looking of the two competitors, partnering with provider organizations to launch accountable care organizations (ACOs), announcing co-branding deals with leading health systems, and unveiling plans to get into the care management business. But its more recent strategy of leveraging partnerships to acquire capabilities, rather than growing by acquisition, has been slow to deliver returns. Going private would remove the pressure to maximize quarterly earnings and allow the company to focus on building in-store health services—and reposition the company to better compete with the growing number of vertically-integrated competitors looking to profit from combining care delivery, pharmacy and insurance to lower the total cost of care.