HIMSS, Part II: Showing your underwear

01 Mar HIMSS, Part II: Showing your underwear

Underwear (ŭn’dər-wâr’) n.

1. Clothes worn next to the skin, beneath one’s outer clothing.
2. Clothes that typically cover private areas to avoid exposure.

On Tuesday night, I had the distinct pleasure of attending the Athenahealth private party at Uptown Cajon in New Orleans. The restaurant is owned by a cousin (Vinny?) of one of the senior sales executives at Athena. I got to learn about the history of the restaurant, including how it was the realization of a life-long dream and a dying father to open the restaurant; that it was the first new restaurant to open up after Katrina; and that it was the first ever smoke-free restaurant in New Orleans. The food proved to be excellent and I recommend to anyone who visits NOLA (New Orleans, Louisiana – baby!).

I had originally planned to attend as part of the Fred Trotter / Beers with Bush experience, but Fred’s wife was unexpectedly hospitalized (she’s doing OK; BWB event rescheduled for March 6 in Houston). The cozy setting also provided some downtime with the athenistas – a totally different experience than anyone meeting them in the booth or during the routine course of business. It was definitely more frat party (in a good way) than brat party (snobby shindig), not in the amount of alcohol consumed or the behavior displayed, but in the sense of good friends genuinely enjoying each other’s company. It was the “real deal, homey feel, snizzle fo’rizzle” as my boy from the LB likes to say.

It also provided some downtime with Todd Park and Jonathon Bush. So what did we talk about? Underwear. As in, showing your underwear. As in, the whole movement toward transparency within healthcare. As in, posting outcomes results on the internet. As in, athenahealth creating the first ever website that publicly shows how good (or not so good) health plans are in paying their bills. You talk about the embarrassment of showing some underwear . . . how about the dirty underwear of an index score 20% below market leaders, 3X as many denials as every other payer in your region, or ~500% variance in compliance with national agreed upon coding standards. Do you think this has gotten the attention of the CEO’s of the insurances? Athena got a few less Christmas cards from their Wall Street based payor friends, but that was more than made up by the avalanche of support from the 8,000+ physicians that Athena counts as clients.

But the story is far more interesting than the Christmas letter exchange – it is about the “transformational power of transparency“. Athena has been contacted by >95% of the insurers in the study to see how they can improve (only the worst two payers have not returned Athena’s calls their claims processing scores). Information is the currency of the future, and comparative information aggregated and displayed by value added healthcare advisor service providers (Athena’s financial software in this case) will be the exchange medium of the Health 2.0 world. As an example of this, another Bush, is paving the way in Florida to reduce the pharmacy arbitrage that has plagued the prescription drug market. The Florida state government has created a simple comparative prescription pricing tool – which can show up to a $110 pricing disparity (search Miami-Dade, Miami, Simvistatin 80mg) for the same drug within the same zip code.

This type of ridiculous pricing disparity goes away in a value-based competitive world based built on a foundation of information sharing and public reporting of results. This has been described as the “price narrowing function” of transparency. The wide variations seen are slowly narrowed as consumers start making rational healthcare decisions based on results and producers ill-fitted to compete are weeded out.

From a presentation by Manish Chopra, Associate Principal,
Mckinsey and Company at AHIP’s2007 Executive Leadership Summit.

The example was taken from an excellent presentation on the effects of pricing transparency. The graph above shows how pricing transparency narrowed the hospitalization cost disparity from 300% among different types of payers to 20-50% by merely publishing the pricing information. No legislative intervention is required – the natural, efficient equilabration is a function of free flowing pricing information in a free market enabled by information technology.

Redefining Healthcare clearly defines the essential role of transparency in creating a values-driven health culture based on results. All
you need to do to jump start the revolution is to show a little underwear.

Just don’t do it in Virginia.