Light in the Darkness: How Information Will Create Transparency in Healthcare
Presentation Transcript
Miriam Paramore
SVP Strategy and Government Affairs at Emdeon
August 26, 2010

Presented at “The Naked Hospital – A Provocative Look at Healthcare” a Nashville Technology Council super roundtable event., Miriam Paramore of Emdeon, mentions change:healthcare in reference to cost transparency in the healthcare industry.

http://www.slideshare.net/nashtechcouncil/light-in-the-darkness-how-information-will-create-transparency-in-healthcare

I always appreciate words of wisdom from someone who has “been there, done that” and Christopher Parks recent guest post on Catalyst Healthcare Research blog – For the Record exemplifies his experience with and passion for healthcare.

In Healthcare Costs, Transparency and Feeling Vindicated Parks says, “… the lessons we’ve learned about transparency and healthcare are really quite simple.  When you incentivize people to make value-driven healthcare choices and provide unfettered access to information about those choices, invariably consumers make far more insightful decisions about their care, its cost and its quality.  It’s simple common sense.  I have no doubt that with greater transparency placing more information and control into consumer hands, Americans could realize millions in healthcare cost savings.”

To learn more about change:healthcare, our cost transparency solution and the need to educat healthare consumers check out the Christopher’s entire post here and visit www.changehealthcare.com.

Christopher Parks was the guest blogger on “For the Record” by Dan Prince, President of Catalyst Healthcare Research. Read his entry “Healthcare Costs, Transparency and Feeling Vindicated.“

http://www.catalysthealthcareresearch.com/learning-center/for-the-record/2010/08/17/healthcare-costs-transparency-and-feeling-vindicated/

Bringing Comparison Shopping to the Doctor’s Office
New York Times: Claire Cain Miller
Published: June 10, 2010

Even if a patient does want to comparison-shop, there is no easy way to obtain complete and useful information. It is a hole in the market that some companies see as an opportunity, especially because many Americans will soon have to pay more attention to what they are paying for, rather than count on insurance to cover everything.

But there has been no easy way for consumers to shop for the best deal on a colonoscopy or blood test. A start-up financed by prominent venture capitalists and theCleveland Clinic, Castlight Health, aims to change that by building a search engine for health care prices. Patients using Castlight could search for doctors that offer a service nearby and find out how much they will charge, depending on their insurance coverage.

A few others are starting to publish health care prices, including Thomson Reuters, a Tennessee start-up calledChange:healthcare, the New Hampshire government, which created a comparison shopping tool for residents, and health insurers. Aetna, for instance, has built tools to help patients estimate prices and may build more advanced tools, said Lonny Reisman, Aetna’s chief medical officer.

Price transparency could significantly change the way health care is bought in the United States. The notion “seems ridiculously simple and obvious, and in any other industry, you would say, ‘Duh, we already have that.’ But in health care, it’s revolutionary,” said Alan M. Garber, a professor of medicine and the director of the center for health policy at Stanford, as well as an investor in Castlight.

The lack of price information in health care has been a big driver of ballooning health care costs, analysts say, because costs are opaque to patients and heavily subsidized by employers. The patient has no incentive or responsibility to keep costs down. But many employers are switching to health plans that require patients to pay more out of their own pockets.

“Since Americans started having employer-sponsored health care, people are paying with someone else’s credit card, so we created a very inefficient market,” said Giovanni Colella, chief executive and a founder of Castlight. “Creating the right incentives changes the way people behave, and that’s where our company comes in.”

Dr. Colella started RelayHealth, which connects patients and doctors over the Web and was bought by McKesson in 2006. He founded Castlight with Todd Park, a founder of Athenahealth and chief technology officer of the federal Department of Health and Human Services.

On Thursday, Castlight announced that it raised $60 million from investors, in addition to the $21 million it previously raised. Safeway, the grocery chain, with 200,000 employees, has signed on as its first customer.

Castlight has received money from investment firms including Venrock, Maverick Capital, Oak Investment Partners and from an unlikely source, the Cleveland Clinic. Hospitals’ business models could be turned upside-down by price transparency.

Several studies and pilot projects suggest that the more patients know about prices, the more money they save. A study published last month by Mercer, a human resources consulting firm, found that people on high-deductible health plans, with more exposure to the prices of doctor visits, spent less. Indiana adopted high-deductible health plans, and the average expense in 2009 for patients on one of these plans was $6,393, compared with $8,570 for patients on a more traditional health maintenance organization plan.

“A lot of it is to understand the driver of costs and how they can start to control that, and encouraging that debate to happen while in the physician’s office,” Dr. Colella said. Castlight is working on a mobile version of the service to introduce next year so people can access the information from the exam table.

Health care pricing became part of the national conversation during the debate overhealth care reform. Prices will be important for the 30 million to 40 million people expected to join exchanges, which will encourage comparison shopping.

But so far, prices have been very difficult to find because health insurance providers and doctors negotiate rates and often agree not to reveal those numbers for competitive reasons. The Cleveland Clinic, for example, has about a hundred different contracts with insurance carriers, each with a different rate for a given procedure.

Ideally, transparency in health care pricing could lead to higher-quality, lower-cost health care, and more patient involvement in buying health care, said Delos Cosgrove, chief executive of the Cleveland Clinic. “Because they begin to realize that a trip to the doctor is not free, they might stay home and take the aspirin instead of getting the neurologic work-up.”

Castlight sells its service to employers and charges by employee per month. (It plans to eventually introduce a Web site for anyone to use.) Employees log on to a search portal, where they enter something like “colonoscopy” to find a list of doctors nearby and how much they charge.

Some insurers have shared pricing with Castlight, but the company gleans most of the information from the explanation-of-benefits forms that patients receive after a doctor visit. Castlight developed a way to pull the information from the millions of forms provided to it by employers.

Anyone who has read an explanation of benefits knows that it often raises more questions than answers, and Castlight says it wants to provide health education in addition to price information. The site explains why a patient has to pay a certain amount and the standard number of tests that a doctor would order for a particular problem.

Safeway has been experimenting with ways to cut health costs, including by using Castlight. “I’m a big believer in trying to create market forces wherever you can and then let personal accountability really drive the result,” said Steven A. Burd, the chief executive of Safeway.

For instance, Safeway pays up to $1,200 for its employees’ colonoscopies, a preventative procedure to detect cancer. If employees wish to go to a doctor who charges more, they must pay the difference. According to Castlight, colonoscopies in the Bay Area, where Safeway is based, range from $500 to $3,000, and sometimes a doctor charges different rates at different hospitals.

Castlight plans to add quality measurements to its price information. There are already several providers of that information, though there is no standard set of quality measurements in medicine. But even with quality ratings, there are many procedures for which Castlight’s service is not applicable. Someone suffering a heart attack is not going to check the Web before calling the ambulance, and a patient who discovers he needs emergency brain surgery is likely to prioritize quality above all else.

Even for more basic services, pricing is not always cut-and-dried. The delivery of a baby, for example, includes the hospital stay and the obstetrician’s fees, but could also include fees for a pediatrician, an anesthesiologist and specialists if there are complications.

At this stage, Castlight works best for big companies that are self-insured and for outpatient doctor visits for which quality does not vary greatly.

http://www.nytimes.com/2010/06/11/technology/11cost.html?emc=eta1

Now Hiring!

Right now at change:healthcare, we are looking to fill some key positions, and we really like referrals. That’s how we hired every member of our team and we’ve gotten fantastic results. We have a team of rockstars (some of them truly rockstars, right Michael?). Not only that, we’re pretty quick when it comes to hiring. We know what we want when we see it, and we do not waste time.

So as we grow, we’re asking for your help in finding the right people to join the team.

Here’s what we need:

Director of Client Services – This person does our implementations with new clients. We’re looking for someone strong on process. They need skills and experience in technology and with rolling out products and services to large employee groups. This is someone we want our clients to absolutely love at the end of the day. If you have the person, we’d love to meet them. See the complete job posting for Director of Client Services on the careers portion of our web site.

Data Guru – This person is in it up to their elbows when it comes to healthcare data. We’ve got some already, but we need more. They should know healthcare claims data like the back of their hand, love playing with data as well as have some DBA experience AND be an effective communicator in client contacts. At the end of the day, our clients should say, “You ARE the Guru.” If you know this person, we want to organize a pilgrimage to see the Guru…erm, interview them. See the complete job posting for the Data Guru on the careers portion of our web site.

If you want to see some examples of the rockstars we’ve got already, you can see our team here.

If you think you might be interested or you know someone who is, please let us know by responding to the standard e-mail address with hr as the addressee @changehealthcare.com. Or stated differently hr[at]changehealthcare[dot]com (nah, we don’t think that will discourage the spammers either, but at least we tried and we’ll look at it as the first hurdle to clear in becoming a part of our team – solving the riddle of our obscured e-mail address).

More firms see incentives, choices lowering costs
MEMPHIS BUSINESS JOURNAL – BY Christopher Sheffield

Caterpillar dealer Thompson Machinery is investing in an Internet-based system that will help employees make cost-effective health care choices, thus reducing their out-of-pocket expenses while helping the company’s bottom line.

It’s an additional investment Thompson officials say will pay off, and one facing many employers trying to combat the rising cost of health care by putting more control into the hands of employees.

The company is introducing its 450 employees, including 110 in Memphis at its regional headquarters and rental center, to a new Web-based portal designed to help them compare costs for medical services and prescriptions, get alerts on discounts and even coupons on commonly used medicines.

The company that developed the system is Brentwood, Tenn.-based Change: Healthcare.
Thompson’s human resources director, Thomas Kilbane, says the company enrolled for the Change: Healthcare service, which it slips right into its self-administered plan, because it creates an easy opportunity to save money.

If an employee can pay $80 for a medical procedure versus $100, that $20 savings means less out-of-pocket expenses, which stretches the employee’s health care dollars. Ultimately, it means less money Thompson Machinery will have to take from profits to fund its insurance program, Kilbane says.

Based on a model Thompson was presented by Change: Healthcare, it expects its annual savings to be in the six figures, Kilbane says.

“It was enough money to make it worth our time and effort to do this,” he says.
Christopher Parks, co-founder and CEO of Change: Healthcare, says using its platform to shop and compare prices, the average annual savings per employee can range from $200 to $400, with some employers reporting savings as high as $1,200 per employee.

Change: Healthcare charges $2 per employee to set up the system, then a monthly fee of $1 per employee. The total number of employees in its system is 92,000.

Parks believes current economic pressures, combined with uncertainties in the new health care reform law, create a tipping point for employers to take actions they likely needed to implement long ago.

“More employers this year and next will shift the benefit plan design where employees will have a great incentive to share the costs,” Parks says.

Cristie Upshaw Travis, CEO of Memphis Business Group on Health, says financial incentives are among the most effective ways for employers to drive down costs. Memphis Business Group on Health has 20 member companies that are self-insured with about 400,000 covered lives in the Memphis metro area.

Memphis Business Group on Health is a not-for-profit formed 25 years ago to provide companies with best practices and collaboration on health and wellness issues.

Financial incentives can take many forms, Travis says. For example, FedEx Corp., a member of Memphis Business Group on Health, has begun paying employees who are pre-disposed to diabetes $50 a year if they get at least one retinal eye exam and one A1c test that monitors glucose levels.

Since implementing the program 3 years ago, FedEx has seen a measurable decrease in emergency room visits and improvements on A1c lab results, Travis says.

A program implemented by First Horizon National Corp. in August allows employees to earn up to $500 a year by staying active and making healthier choices. Employees, who pay $2.50 per pay period to participate, wear a pedometer that tracks daily activity and can have key body metrics checked at designated kiosks.

Employers are increasingly coming to understand it’s in their financial best interest to help employees make healthy choices, since results could mean fewer absences and increased productivity, Travis says.

Parks, a health care administrator before starting Change: Healthcare three years ago, says comparing costs gives more control in the health care process.

“We’re not saying don’t go to the emergency room, but we can let you know when you spend a dollar if it is spent wisely,” he says.

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http://memphis.bizjournals.com/memphis/stories/2010/04/26/story4.html?b=1272254400^3235791
csheffield@bizjournals.com | (901) 259-1726

Great article from Jane Sorenson-Kahn pointing out that employers see “cost-sharing among employees as a top #1 cost-control strategy.” and that employers are “less satisfied [with] online comparison tools.” That’s a bad mix. No information on price AND you’re going to have to pay for it. Sounds like going to the auto-repair mechanic who just grins when he sees you walk in the door.

Let’s see if we can wipe that grin off of his face.

First, the Facts: Healthcare costs are out of control trending toward 16% of the GDP today and projected to be 20% by 2017 (that’s just around the corner, folks). So cost-shifting to the employee should come as no surprise. And with an economy like we’ve had and jobs as scarce as they are, employers have their choice of job candidates, so if you don’t like the health plan, there’s the door. So we are going to be paying the bills now. Time to put on the big boy pants and get serious. That damned mechanic’s grin just widened a bit.

Second, the Solutions: Most current online pricing solutions are relative scales where $ is inexpensive and $$$$ is expensive. When the treatment is $55-85 that MIGHT suffice, but when it’s $600-1,300 (like the MRI my daughter had on Friday), the difference between $ and $$$$ is significant. People WANT and NEED specific pricing information. Usually when you DO get pricing info, it’s an average negotiated rate, not the exact price (since doctors do NOT all get paid the same for the same service).  So even the “precise” number lack s precision. And I’m really getting sick of that mechanic’s smirk.

This is where change:healthcare steps in. We provide the tools that employers are telling us they have been looking for. We look at the services and prescription people receive, and then we proactively reach out to employees when they are paying too much for a service or a prescription and tell them exactly where they can go to get it for less. They don’t have to go where we tell them. It’s their money, and they can spend it how they want. But at least they know now. The mechanic has a bit of a surprised look on his face.

Oh, and then we monitor your employees’ spending for them. If prices change, we let them know that there are more cost effective options. Prices for doctors vary by 100% for many specialties. Prescriptions vary 40% between chains. We’ve seen diabetes maintenance medications that are $750/month at one pharmacy and $450/month across the street for the EXACT SAME THING.

We tell your employees.

We provide the online pricing tools employers have been looking for.

And we wipe that damn smile off of the mechanic’s face.

Employers, we hear you. We’re here to help.

Jane’s post is based on a PWC report that you can find here: “What employers want from health insurers in 2010.” Photo from user Neubie on Flickr.

Co-Founder and COO Robert Hendrick spent a few minutes with the local TV crew to share tips on how to save money on your prescriptions. Easy steps that can add up to huge savings. You’ll be surprised!

Thanks for all of the support, and for trusting us to help you make smarter healthcare decisions and save money in the process.

Folks from coast-to-coast are talking about change:healthcare! The New York Daily News is talking about healthcare cost savings in the east, while the team was in California presenting as part of a panel at the Health 2.0 conference. And here at home in Nashville, the Venture Capitalist arena is buzzing about the company too. We are amazed by the number of people taking interest in saving money on their healthcare, and who trust us to help them out.

Below is a video from the Nashville NBC affiliate WSMV. The clip shows change:healthcare COO and co-founder Robert Hendrick working with the reporter to show people 4 ways to save on their medical costs.

All in all a very good week at change:healthcare! Thanks for all of the support, and for trusting us to teach you how to save money on your doctors visits and prescriptions, and to help you make smarter healthcare decisions.