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Hospitals still not ready for transparency

April 17th, 2013

by Kent Bottles

A year ago I wrote a Hospital Impact blog post titled "Is Your Hospital Ready for Radical Transparency?"

Three recent articles would indicate that the answer in April 2013 is still a resounding no.

Steven Brill recently wrote a highly critical Time Magazine cover story that bemoaned the lack of transparency of nonprofit hospitals. In his 24,105-word essay, Brill concentrates on how hospital bills are indecipherable to the average patient.

By following the money trail, Brill dissects actual patients' hospital bills to examine the role of the hospital chargemaster (an internal price list for products and services) and how it is possible for a nonprofit hospital to markup acetaminophen 10,000 percent, charge $77.00 for a box of sterile gauze pads and $18.00 for a single diabetic test strip that costs 55 cents on Amazon.

[More:]

Uwe E. Reinhardt, an economics professor at Princeton, responded to the Brill article by criticizing not-for-profit hospitals for their lack of transparency and public accountability. Unlike for profit hospitals whose websites list annual reports to shareholders and mandatory U.S. Securities and Exchange Commission reports, nonprofit hospitals, according to Reinhardt, make it difficult for community members to view their Form 990 reports.

The New Jersey Commission on Rationalizing Health Care Resources unsuccessfully recommended in 2007 that the general public should be able to see:

  • Nonprofit hospital's articles of incorporation and mission statement
  • Names of board of directors and possible conflicts of interest
  • Board bylaws
  • Medical staff bylaws
  • Three most recent 990 forms
  • Direct and indirect management compensation
  • Three most recent annual reports to the community
  • Board's conflict-of-interest policy
  • Strategic plans approved by the board
  • Hospital's chargemaster and its sliding fee provisions for the uninsured

In many small cities, tax-exempt not-for-profit hospitals have become the region's most profitable businesses and largest employers. If the transformation of the American clinical delivery system eliminates the 30 percent to 40 percent waste that experts like Brill document, where does that leave the local economy?

An in-depth article in the National Journal tried to answer that question by looking at the past, present and future economy of Pittsburgh. Noting that the University of Pittsburgh Medical Center now has its offices in the US Steel building downtown, the article describes how healthcare created enough jobs to largely replace disappearing manufacturing jobs and lift the region out of recession.

A sobering analysis of the Pittsburgh economy of the future shows how the same strategy will "wreck the economy" because the expansion in healthcare employment is simply not sustainable.

Hospitals that survive and thrive in the coming years will have to become more transparent, more efficient and more connected to their local communities. These three articles describe the challenges and possible solutions that all hospital leaders will face trying to cope with a transformed clinical delivery system that is increasingly transparent, efficient and patient-centered.

Kent Bottles, M.D, is a Senior Fellow at the Thomas Jefferson University School of Population Health.

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