Spectrum Health CFO Michael Freed: On a Journey to Price Transparency

The issue of healthcare price transparency has catapulted to top of mind for patients and healthcare leaders following a TIME exposé on hospital prices and CMS' subsequent release of charge data. While price information can help patients make informed decisions about their medical care, progress on transparency has been slow. The Catalyst for Payment Reform and the Health Care Incentives Improvement Institute gave 29 states an "F" grade in healthcare price transparency, and gave only two states an "A" grade in a report in March.

Mike FreedHowever, some health systems, such as Grand Rapids, Mich.-based Spectrum Health, are making headway toward providing easily accessible, useful price data to patients. Michael P. Freed, executive vice president of corporate resources and CFO of Spectrum Health, and president and CEO of its affiliated insurance company, Priority Health, describes the system's journey toward price transparency.

Working toward a goal of transparency
In October 2006, Spectrum Health began posting average prices for 200 of its most common inpatient and outpatient procedures on its website. In February 2008, it added average payments it receives from Medicare, Medicaid and commercial health insurance companies for certain procedures. While the average prices do not include physicians' fees and will vary based on various factors, including health plan benefits and preexisting conditions, the estimates give patients a general idea of what to expect on their medical bills. For Priority Health members, Spectrum Health goes one step further and provides a tool to estimate members' out-of-pocket costs based on their deductible and other factors.

Posting price information was a natural progression toward Spectrum Health's overall goal of transparency, according to Mr. Freed. The system began posting quality data on its website in January 2006 and had cultivated a culture of openness and honesty since it was formed through the merger of Butterworth Health Corp. and Blodgett Memorial Medical Center in 1997. "The main reason why [transparency] is important is you have to establish trust with the community," Mr. Freed says. "The community [members] entrusted us to allow the merger to happen many years ago. The least we can do is to be open and honest with them."

Spectrum Health continues to seek ways to provide information that can help patients make healthcare decisions. In April, it announced a joint venture with Healthcare Blue Book to publish specific cost and quality information for more than 300 procedures across different facilities and physicians for Priority Health members. Planned to go live this summer, the tool will estimate the fair market price for procedures and show if facilities are below or above that estimate.

One of the factors driving this increased transparency is the growing number of patients with high-deductible insurance plans, according to Mr. Freed. For example, nearly half of Priority Health members have a high-deductible plan. "More and more people have high deductibles and co-pays, and they need more tools to be able to navigate the system and get the best value for themselves and their families," Mr. Freed says. "It is our responsibility as a community-based organization to provide that."

More Articles on Price Transparency:

Increased Transparency Necessitates Chargemaster, Revenue Integrity
TIME Journalist Steven Brill to Senators: PPACA Price Transparency Won't Lower Costs
State Websites Don't Share Most Useful Healthcare Prices, Study Says

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