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Analysis

How One Health System Is Making Prices Transparent

By Bruce Japsen  
   February 27, 2020

The stance by Flagler Health+ is in contrast to much of the rest of the hospital industry. CEO Jason Barrett talks about why the Florida-based system provides its pricing data to the public.

The federal government’s final rule requiring hospitals to provide patients with more easily accessible information on covered healthcare services could bring an unprecedented amount of transparency to healthcare prices.

Though the final rule doesn’t take effect until January 1, 2021, Flagler Health+ has forged ahead of most hospitals and health systems across the country and the Florida-based system’s stance is in contrast to much of the rest of the hospital industry.

Flagler is offering detail on what the hospital system is being paid by health insurance companies while at the same time comparing its negotiated rates with those of other health systems in its Florida region. Flagler, a $350 million health system that serves northeastern Florida, first published its rates in a special section on its website in the fall of 2019. 

HealthLeaders recently asked president and CEO Jason Barrett about Flagler's price transparency efforts. This transcript has been lightly edited.

HealthLeaders: What is your leadership position on healthcare price transparency? 

Jason Barrett: I support President Trump's Executive Order on Improving Price and Quality Transparency, despite the American Hospital Association’s position against it. Healthcare providers should be able to compete on price while still delivering high-quality care.

Related: President Trump Defends Price Transparency Rule, Attacks Medicare for All at State of the Union

HL: Is price transparency a threat or an opportunity for hospitals and health systems?  

Barrett: Price transparency illuminates industry dynamics that consumers are not aware of, like insurance companies reimbursing large health systems at much greater rates than smaller community hospitals that are providing the same and often better services.

 

Jason Barrett is the president and CEO of Flagler Health+ in Florida. (Photo courtesy of Flagler Health+.)

HL: How many payers are included in your negotiated rates that you publish?

Barrett: All of the commercial payers in Florida because they have to report that to the Agency for Health Care Administration. We got our data from the Florida Hospital Association.

HL: What about Flagler Health’s perspective is unique on this issue? 

Barrett: We have already shared with the public the estimated average payments that healthcare systems in our market are receiving from commercial payers and we demonstrated that there is a big swing. We would contend our data shows that the consolidation of healthcare systems in America is actually increasing prices rather than decreasing them. One could extrapolate that small community health systems like Flagler Health+ are subsidizing inflated payments to larger systems.

HL: Can you provide an example in the market of the changes?

Barrett: [An example is] the same health systems that are building high-cost freestanding ERs that inevitably treat non-emergent conditions at exorbitantly high price. Freestanding ERs are continuing to increase healthcare costs overall and there is a proliferation of them in Texas and Florida specifically—even in this time when legislators and constituents are demanding lower healthcare costs.

At Flagler, we are focused on keeping patients out of high-cost centers like ERs and hospitals unless absolutely necessary, and we can prove that our approach is helping us reduce overall healthcare spending for our patients, local employers, and our communities. 

Flagler Health+ and the clinically integrated physician network of the First Coast Health Alliance (FCHA) have a value-based performance contract with a large commercial payer in our system. In this agreement, the performance on approximately 9,000 members attributed to our network is compared with the performance of approximately 52,000 members attributed to other providers and health systems in St. Johns, Flagler, and Putnam counties.   

In the most recent actuarial report provided by the insurance company comparing July 2018–June 2019 with July 2017­–June 2018, our cost trend outperformed the market in total annual cost trend and risk adjusted cost per member. Our cost trend was -1.67% while the market cost trend was +4.49%. 

The cost per member per month for our network was $437.74 compared with $493.15, resulting in an 11.2% savings of $55.41 per member per month or $664.92 per member per year when compared with the market. 

Related: How Flagler Hospital Improved Clinical Outcomes With AI: 3 Steps

HL: If the price transparency rule is implemented in 2021, how will you lead Flagler though this transition effort? 

Barrett: We have invested in a technology company [called] Healthfully and are working together to develop consumer-centric price transparency tools that will help ensure that patients get the right care, at the right time, at the right place, at the right price. 

HL: Why does healthcare price transparency matter to healthcare systems and hospitals?  

Barrett: Price transparency matters to us because we care about the economic health of our patients, local employers, and communities. Neither patients nor self-insured employers should be surprised by what can sometimes be devastating healthcare bills. My own family experienced medical bankruptcy when I was child as we struggled to get appropriate care for my special needs brother. No one should have to choose between paying the light bill and filling their prescriptions.

HL: How will this be meaningful to patients?

Barrett: If their out-of-pocket exposure increased by six points and medical inflation is only three points, you are in a position where it’s taking more of a toll on their disposable income. It will help them make choices.

HL: Let’s just say the rule is delayed somehow, do you think transparency will happen and will you do it if the rule never comes to be?

Barrett: It may never come to be, but we are going to hang our hat on this concept. There is going to continue to be emphasis for those that are going to have to select [health] systems based on price.

Related: There's Still Time: 3 Threats Could Thwart Hospital Price Transparency Rule

“[The price transparency final rule] may never come to be, but we are going to hang our hat on this concept. ”

Bruce Japsen is a contributing editor for HealthLeaders.


KEY TAKEAWAYS

Flagler Health+ contends its data shows that the consolidation of healthcare systems in America is actually increasing prices rather than decreasing them, says Barrett.

The health system is "going to hang its hat" on price transparency even if the final rule is delayed or never comes to be, says the CEO.


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