Health care transparency Featured

6:04am EDT June 30, 2006
Consumers today have a wealth of information to help them make informed buying decisions on everything from automobiles to refrigerators. But when it comes to health care, there’s been a real void of publicly available cost and quality information, particularly that which is accurate. According to a recent Harris poll, consumers can guess the price of a new automobile to within $300. But when asked to estimate the cost of a four-day stay in the hospital, they were off by $8,100.

Until recently, most insured consumers were insulated from the true cost of their health care treatment. However, as health care costs continue to rise at double-digit annual rates, more and more employers are turning to consumer-directed health plan designs to actively engage their employees in health care decisions and share in the cost of their coverage.

In this new model, purchasers and consumers are looking for a more transparent health care market, one where decision-making is supported by valid and accessible comparative information.

In its 2001 report, “Crossing the Quality Chasm: A New Health System for the 21st Century,” the Institute of Medicine called for a creation of a common set of standards to help reform the health care system. Among the IOM’s 10 rules for reform is replacing secrecy with transparency. “The health care system should make available to patients and their families information that allows them to make informed decisions when selecting a health plan, hospital, or clinical practice or when choosing among alternative treatments,” the report says. “This should include information describing the system’s performance on safety, evidence-based practice, and patient satisfaction.”

This is a tall order. The good news is that progress has been made. Many governmental entities, quality associations, health systems, insurers and technology partners are developing sophisticated tools that enable consumers to access quality comparison data via the Internet. A few examples include:

  •, where consumers can compare the quality of health plans on a variety of measures, including accreditation, quality of care and patient satisfaction.


  •, which includes data submitted by hospitals regarding the Leapfrog Group’s recommended safeguards to help prevent medical mistakes.


  •, which specializes in quality-of-care reports on doctors and hospitals, and recently began selling cost reports on about 50 common procedures, from heart bypass survey to hip fractures.

These first-generation transparency efforts are certainly a major step in the right direction, but there is much more that can and should be done. For example, pricing data is helpful to consumers, but it has minimal value without knowing the total cost of caring for a given condition and the quality of that care. Measurement and public reporting of performance are the real keys to improving the quality and efficiency of the health care system.

According to the IOM, “Purchasers and regulators should create precise streams of accountability and measurement, reflecting safety, effectiveness, patient-centeredness, timeliness, efficiency and equity.”

Transparency is a useful stimulus to performance improvement only to the extent that all parties participate. Employers can play a significant role in these efforts by promoting and rewarding health care quality and cost effectiveness. They can also collaborate with health plans, hospitals and other key stakeholders to help establish priorities for what is needed to:

  • Create a full dashboard of performance measures.


  • Promote better-informed decision-making.


  • Stimulate performance improvement.

Achieving a truly transparent health care market will take time and require the work of multiple stakeholders, all of whom must acknowledge the complexities, significance and sensitivity involved in performance reporting. They must also acknowledge that initial reporting will not be perfect, as is the case in any complex endeavor. But we must begin and we must persevere until we get it right; because the ultimate rewards of these efforts in terms of better quality and lower costs will be immense.

WILLIAM ALVIN is president and CEO of Care Choices, the top-rated commercial plan in Michigan, and No. 12 out of 257 plans in the nation, according to U.S. News & World Report/NCQA’s “America’s Best Health Plans Report 2005.” Reach him at (248) 489-6208 or