Providers traditionally have funded money-losing programs, and even Medicare and Medicaid access, through margin on their commercial contracts. CPR Executive Director Suzanne Delbanco, PhD, says that as provider consolidation has continued, they have amassed more market power, and thus, there's less competition for their services to health plans and employers. As a result, prices may have increased exponentially to fund these money-losing services.
But that's only one scenario. Certainly, some providers out there charge prices that bear no relation to market reality. Whether the extra dollars are necessary to fund money-losing services that would otherwise be absent is a matter of how much and to what degree they do so. Determining how that equation is resolved is impossible without transparency.
Also, Delbanco says, in the past providers may have been afraid to show price information without also showing quality information, implying that higher cost begets better quality. With numerous quality rating systems now coming on line, providers may have an additional weapon to show that their prices are indeed based on higher quality. And if they're not, you, as a leader in your organization, may have some adjusting to do.
Catalyst for Payment Reform seems to have modeled itself in some ways on the strategy of the Leapfrog Group, which has a somewhat controversial record as a proponent—and arbitrator of—quality scoring for hospitals. It's also Delbanco's previous employer.