 It's my pleasure to introduce today's speaker, John Friedman. So John's been working in the healthcare industry for over 30 years, most recently as the CEO of the consulting firm, Friedman Healthcare. That firm has been engaged in multiple states to, among other things, create all-payer claims databases, implement health insurance and health information exchanges, and to generally support the modernization of healthcare and health information infrastructure. Throughout his career, John has worked with actors in essentially every sector of the healthcare world, including healthcare providers, hospitals, nonprofits in the healthcare sector, insurance companies and state actors, including essentially every agency you can think of in Massachusetts that even has any impact on healthcare policy. So John's going to give a short presentation on some current issues involving healthcare and specifically markets for healthcare, as well as proposing some data-driven solutions to some of those issues. He's asked me to say that you're free to ask questions along the way or to save them for the end of the presentation, whatever makes most sense. So with that, thank you all for participating and please welcome John. Thank you. Thank you, Mason, for the very warm introduction. It's a pleasure to be here. Hello, everybody. Good afternoon. Yeah, good afternoon, everybody. Healthcare, as is often said, is a team sport, and certainly clinical care is. But health policy, which tends to be where I spend most of my time, is also very much a team sport. And so I'm really delighted to be in an audience consisting of all of you because it's great that there are some physicians like me who hopefully know something about clinical care and something about the organization of care and the delivery of it. But there are a whole lot of other actors out there who are necessary for the proper administration, regulation, oversight, and all the policy work. So thank you all for coming today. I come from a family of physicians, and my dad was a doctor before me. And after I finished all my clinical training, I went on to business school to get an MBA, and he kind of shook his head at me and says, what, you need another degree? What are you going to do next? Go to law school? So I thank the Berkman Klein Center for bringing me one step closer to my father's nightmare. But with that, let me dive in. So as was said, I'm happy to take questions along the way as we go, or you can save them for the end. I've got a couple of disparate topics to discuss, but I'm actually quite willing to go in further different directions as we get going. So really two things that I'm going to focus on today, issues-wise. One is not driving inflation in medical costs in this country. I'm going to spend some time on and look at the data that we have around that. The second thing is, talk about efforts on transparency. Transparency around cost and quality. You've heard of a number of these. There are both public sector and private sector efforts around it. And talk a little bit about, am I still working here? I'm going to wrap up by talking a little bit about the possibility of different sets of data in this kind of health policy point of the battle. Take your questions. So let's start off right here. So this is a report from one of you medical engineers came out in the last two weeks from the Health Care Cost Institute. And the Health Care Cost Institute gets data from four very large insurers around the country. So it's a pretty representative snapshot of national medical costs. And they have been tracking for the last four or five years medical inflation. And it's not a shock to anybody that total spending on health care is going up. So it's going up about 15% on average there. Some sectors within health care are going up higher. Drugs, 27%. We know the story is there. Some less inpatient care, only going up by 8%. But overall, it's going up. But why? What are the factors that go into that? So if you're spending more on gas every month, it's either because you're using more gallons of gas or you're paying more at the pump for each gallon. So what is it? So they also looked at that. And they looked at, well, how many gallons of health care are we using? And it turns out that utilization in health care over the last five years has been declining largely. It's flat or going down. And it's the prices that have been going up. Some of you may know, Uva Reinhart, the health economist out of Princeton, co-authored an article some years ago entitled, It's the Price is Stupid. So it's not the first time that this has been seen. So did we know about this? Have we known about this here in Massachusetts? Well, in fact, we have. So this data goes back to 2010. And this is some work we did with the attorney general's office here in Massachusetts. Now, Massachusetts has got some unusual laws that came with health care reform implementation. And one of those laws empowers our attorney general, somewhat specially, with the ability to collect and report on a whole lot of information regarding health care, health care prices in particular. And so this looks at the big three health plans in Massachusetts. You've got Blue Cross, Harvard, and Tufts. And what fraction of all of the price increases over several year intervals was due to increase in utilization. So utilization is this bar here, which represents only somewhere between 10% and 30% of the gain in any given year. And all the rest is either made up of what's called unit price or what's called service mix. And service mix is really sort of a backdoor way of saying price. That is, let's say you used to get a conventional mammogram and it cost $100. But now we're going to substitute that mammogram with a digital mammogram for which we pay $200. That's a substitution. You're still really getting the same service, but you're paying more. Similarly, you could get the MRI outpatient imaging center for x price, or you could get it at a hospital outpatient department for 3x price. That's a substitution of goods. The number of the amount of utilization hasn't changed. Technically speaking, the price didn't change, but you went to a higher priced option, a higher price provider. So it's either unit price or this service mix that's generating most of the increase here. Yes? I want to make sure I understood what's counted in the tally of health care. So I realize I'm kind of black boxing that. But what is counted there? Sure. For the purposes of these studies, we're talking about medical insurance and what's covered by medical insurance. So this, by the way, does include the patient out of pocket component of that, but it's basically what would be paid for. So it's doctors visits, outpatient care, diagnostic testing, inpatient care, pharmacy, behavioral health, those are the sorts of things that are in this. Nothing about social determinants of health, because we're going to talk about that a little later, I think. So it's one thing to know that the prices are going up, and maybe that's a bad thing, but there's something else that's going on as well. And it turns out that not only are we spending more money on things, but the money is being spent quite unevenly. So again, this goes back to work from the attorney general and looked at the average prices paid by a major Massachusetts insurer across a variety of different hospitals in the state. So this is all the hospitals in the state, and you'll see that some hospitals, it averages out to about 1.0. This is set to the numerical average of the whole state, but some are getting 0.5. So some are getting half of the average payment, and some are getting twice the average payment. So you've got four-fold payment, and this is for the same service on the same page, and appendectomy, and MRI, a session of physical therapy. You've got these huge variations. This raises some questions. If I'm buying a car, I can pay four times more for a Mercedes and not get a Toyota. But what am I getting for that? Well, let's look at it. What are you getting? And it turns out that these differences in payment were not due to differences in severity. So it's not that these folks were dealing with sicker patients. They were not due to quality. There's no measurable difference in the quality of these guys than those guys. In fact, in certain cases, the quality down here turns out to be higher than the quality up there. But in fact, there's no real relationship. It's just as randomly distributed. But it really is driven by market share. So you've got organizations up here that are dominant in the market that can demand higher payers out of the commercial insurance companies than these folks at this end of the distribution. So you're paying more, but you're actually not getting higher quality. You're not treating sicker people. And there's not any other obvious reason why it's there. And furthermore, this thing has persisted year after year. So this was, again, this dates back, I forget, either the 2010 or 2012 study. But this is tracked year after year. And in fact, the degree of disparities in payment has not gotten better. So is this true everywhere? So this is Boston. Compare Boston is the red line, the red vertical line, compared to many other medical markets around the country, so different geographic areas, for a variety of elective medical interventions. And it turns out that the degree of price variation in Boston does indeed tend to be higher than in most of the country. Although no place in the country is it without variation. And you probably won't be shocked to hear that in markets where there is a relatively high concentration of providers, that is, you've got mergers amongst the doctor groups and mergers among the hospital groups, there tends to be a greater degree of price variation because the big fish get the big dollars and the little fish get the crumbs that are left over after the big fish get paid. Yes. Hi, I'm Sebastian Diaz. I'm staff at the Berkman. How do you, in the previous slide, had quality as a metric as it is not assessed by quality? How do you, what is the assessment for quality under that? Great, I didn't bring my slides for that, but we actually looked at it two different ways. One was we looked at the health plans themselves and said, how do you measure quality? In other words, if you're paying A more than you're paying B, is it according to your own information that A is better than B or not? So we got the quality information from each of the payers. That was one way we looked at it. And then we went out independently and gathered all the quality data that we could. So CMS publishes a fair amount, but we were also able to generate a lot ourselves from some health data that the state has. For example, the state has a hospital discharge data set. Every person who's discharged from an acute care hospital, there was a record of what you were admitted for, what was done, whether you were discharged alive or dead, any complications that happened along the way. And we were able to analyze those as well. So we actually looked to a broad variety of things to see if there was any between quality and from all the available data, they're not there. Now, a separate question which I'll also touch on later is, are all of our quality measures fully comprehensive? The answer is surely no. But from all of the quality measures that we have, we fail to find a relationship. And by the way, that's not unique to Massachusetts. New York State did a big study just about a year ago. Found the same thing across three separate markets in New York State, which is, of course, a bigger state than we are. Yeah. Oh, sure. Sorry. Just to follow up, most of the data points that are assessed from the hospital's perspective could be considered like objective data. And not necessarily some of the subjective data that patients view as quality metrics. Yes. None of those were incorporated. Or did you look at any of those? They were. We did, in fact. So there is a national survey known as HCAPS, which is sort of a standard thing that all hospitals do. And so they collect patient experience data. So there's a sort of 10 domains of questions within that. And we looked at that as well. And again, we don't find that there's the connection. So thank you for that question. So we got a big problem in Boston. There's big payment disparities. They seem to be related to the fact that we've got certain dominant payers, OK? Market dominant payers, not payers, but providers. And non-market dominant providers. But this is playing out across the country. And we're seeing this. And so our inflation continues to happen on the price level, not on utilization, not on the other things. OK. As providers continue to consolidate, we're getting a vicious cycle now. So what's happening is that more and more care is shifting towards those higher priced providers. That's almost paradoxical. But here's what it looked like. So if you look at the bottom of the bar graph there, 2011, they broke out how many people were getting care by the relative payment amounts in each of the hospitals. This is actually the percentage of payments. Each quartile represents a quarter of the patients. But these all represent what fraction of the actual dollars go out there. So the highest paid quartile gets more than half the dough. The second quartile gets about 25% of the dough. And the bottom two quartiles get less than a quarter of all the funding, in terms of quartiles of payment levels, not volume. But that's just worsened over time. So what happens is the people who are in the top half collect more. And that's probably happened for a few different reasons. Ongoing acquisitions, when a large system acquires another unit, it tends to raise the prices of those units up to the price of the rest of that unit. So all the existing patients there are now getting paid more, and they're now part of the higher cost one. But the other thing is you get what Ross Perot would have called the giant sucking sound, that once you've got this wealthy subset of providers, they can now outbid and poach from the other providers. So you'll occasionally hear announcements where so and so is proud to announce some so is joining our transplant center, joining our such and such center. Because they were able to say to them, look, you can keep working where you are now, or we'll give you a 50% pay hike if you come work for us. And it becomes hard for professionals to resist that kind of temptation. What? I'm going to get all the resources I need, and you're going to pay me more? OK. So you get a little bit of a self-fulfilling prophecy here. And what this has resulted in is that we have started to take money away from other priorities. So here's where I'm talking about social determinants of health, among other things. So in the Massachusetts state budget, over a 10-year period, all spending on health care went up by about 21%. And spending on everything else in the state budget fell by 7%. So you can see across there. Even ironically, behavioral health went down. Public health essentially flat. Education is down. Human services is down. Local aid slashed. One little object went up in there. It's not a huge number, but infrastructure, housing, economic development did go up. But all in all, that is where the dollars are going. So as we spend more and more on health care, we're taking it away. And I don't have the data with me today, but there's US Census Bureau data that also shows that out of personal expenditures, people are spending a greater fraction of their personal income to cover. Therefore, they have less money to spend other things that individuals would spend. And ultimately, where this really causes trouble is this. There is what I call a reverse Robinhood effect going on with insurance. So consider a large company that has a whole spectrum of employees. It's got some senior executives and managers who are very well paid and well compensated. And it has some other line employees, clerical staff, other folks who are much lower paid. They're all on the same exact health insurance plan. They all have the exact same co-pays. They all have the exact same network. It's the exact same premium paid for all of them. And yet, they do not get the same benefits out of it. Now you might think, wait a minute, health insurance is a great social equalizer. This helps make up people who are more economically disadvantaged, people who are poorer, frankly. Well, they're gonna get more relative benefit out of this, aren't they? Well, maybe not. So this graph's a little tricky to understand, but what this is comparing is based on IRS data. If you look at zip codes around Massachusetts for high affluence versus low affluence zip codes, how much do you get out of your health insurance? So we took all health, oops, sorry about that. We took health insurance spending and divided it up into quintiles. So these are the most expensive people on any health plan. These are the least expensive people on any health plan. They'll always be that, that's fine. But it turns out that of the most expensive people on the health plan, that is where Blue Cross or United or Harvard spent the most money, the lion's share of them come from the highest socioeconomic zip codes in the state, okay? And at the other end, you'll see the lowest socioeconomic zip codes end up being the people most likely to spend the least money on their plan. In other words, what's happening is if the health insurance premium is taken equally out of everybody's, wait, sorry. Yep. All right. Okay, let's try this now. Okay, so the point, if it wasn't heard, so the folks who spend the most money out of a health care insurance plan are the people from the wealthiest zip codes. The people who spend the least money out of a health insurance plan are the people from the poorest socioeconomic zip codes. And what that actually means is if you are one of those low spending people from that lower socioeconomic zip code, you are subsidizing the health care for the more wealthy executives on the same plan, okay? Now, why is that? We're not completely sure why this is, but I've got a few hypotheses as to what's likely. One of them is if you're an executive and you're having headaches and maybe you should get an MRI, maybe you don't need it, I'm gonna hypothesize that certain people are gonna be more likely to advocate for and more likely to get acquiescence from their providers to order that test than somebody who's not. A second thing is if you're a senior executive and you need to take that half a day off to get your MRI, it's not that big of a deal. Whereas if you're an hourly employee, you may not really wanna take that time off. A third thing is there's gonna be co-pays or deductibles associated with it. So if I have a say $150 copay on that MRI, well, if my salary's $150,000, that's not that big of a deal, but if my salary's $40,000, that's a much bigger deal. And then finally, and this gets back to the provider price variation stuff I was showing you before, is that if you're from the wealthier areas, you are much more likely to go to an expensive facility. So if you are from Brockton, you're more likely to go to Brockton Hospital, which is in fact an inexpensive hospital compared to things. Whereas if you're from other places, you're gonna go to a more expensive community hospital or even an academic medical center. So you've got all these factors that are probably playing into this reverse Robin Hood. So the good news is we've got health insurance for 98% of Massachusetts residents. The bad news is we still have got this silent, hidden, and largely unknown perverse subsidy of the poor for the rich. So I'm gonna shift gears. I don't know if anybody has a question on that before I move on to transparency. Yes. Sorry, just another clarification question. When you were looking at this and you said they were the exact same plans, I'm not as familiar with Massachusetts, but within companies are there options for having PPO versus something else? So were you able to account for where certain employees are choosing the kind of higher cost but less access to a plan? Yes, exactly. So all of this is done on a per product plan basis. So it separately considers that. So within each of those, we'd compare the HMOs separately from the PPO in that case. Yes. All right. So with that, I'm gonna shift gears a little bit and talk about consumer transparency in healthcare. All right. So this is a failure of mine that I'm very proud of actually. This was the first website ever to compare live cost and quality information about doctors and hospitals on the same page for consumers. This was launched almost 10 years ago in 2008. And by what was then the Massachusetts healthcare costs, what was it called? Healthcare Cost and Quality Council, okay? Which has now become what is the agency known as CHIA, the Center for Health Information and Analytics. And this basically was, we used an all payer claims database so we knew what the actual payments were for various services and we married it up with the best quality information that was available to in this example, show bypass surgery. You wanna get heart bypass surgery and you could start off here on the side and you could look at, here's a couple of different hospitals that we're looking at. This happens to be Beth Israel, Boston Medical Center and Brigham and Women's Hospital and it gives you a star rating for their quality. It gives you dollar signs for their cost and then you can drill down into it further and it actually goes into the specific mortality rates of these institutions and the actual high, low and median costs for each of them. And so this was in some ways groundbreaking but as unfortunately is the case, sometimes when you build it, the people don't come and it did not get heavily used. It was up for four or five years and it got sunsetted. And so for the last several years, Massachusetts has not had a cost transparency website at all and it's getting ready to launch a new one now which is gonna look like this, okay? So this is the new beta site from Chia and you can go into it and look at questions about things, help you get that. You can look in what type of care you wanna see and in this particular case, I went into MRI. I suppose you need to get an MRI done. So here it is, you can put in your zip code, how far you're willing to drive, you can put in what insurance company you've got and it'll actually give you insurance company specific data. I have blotted out the names of the providers because this is not yet a public website but this information will be fully out there before the end of the month. And basically, there's a whole spectrum of things. So this is the first screen, that is the least expensive MRI providers within 20 miles of the zip code I put in there. It goes from about 600 bucks and if I'd gone through the multiple pages, there are about 10 pages of providers, at the far end was one that was about $3,000. So five-fold variation in getting the exact same MRI scan. And this is coming out now. So this is a beta version that's being shopped around to various stakeholders in the community for physicians to take a look themselves, make sure there's nothing egregiously wrong, et cetera. But this is sort of where it's going. One of the very first to have price transparency out was our neighbors to the north, New Hampshire. And New Hampshire started in approximately 2006 with this website, which included costs of a whole variety of procedures. They've recently upgraded, it's a terrific website. If you have not gone to nhhealthcost.org, you definitely should definitely check it out. Actually, it says down here, I think it's any, well, nhhealthcost.nh.gov, but I think it's also nhhealthcost.org. In any event, they've got a whole variety of tools and they've got things there for people who are uninsured and it turns out that a lot of people who are uninsured love to go to this site to get some idea of what they're paying. And ironically, we're finding that there's a fair amount of web traffic that comes to this site from all around the country, because we think it's one of the few that's got this sort of data. So we're getting Californians who are sending from queries about what do I do if I'm uninsured? They end up getting linked to this website and they seem to be going there to at least, I don't know that they're planning to come to New Hampshire for their care, but maybe they're at least trying to get some idea of what things might cost. And so, again, they've got a whole variety of things. You can pick what type of, you know, condition or procedure you want to look into, choose that, drill down. So going into radiology, again in this case, we're taking a look at costs for different MRIs. So this one that the price range, prices are a little bit higher, ranges from about $1,000 up to $7,300 for different MRI providers there in New Hampshire. Okay, so seven fold variation in prices. It does pay to shop around. So what's the deal with transparency? Some good stuff and some bad stuff. I think, you know, the greatest success is it's enabled consumers to get at something that they never had before. And even, you know, this flawed, limited information, et cetera, is sort of better than none. It gives them something that they can get at. It can drive prices down through comparison shopping and even New Hampshire helped resolve a contract dispute with one very high priced hospital that came to know with the Blue Cross of New Hampshire. And ultimately, Blue Cross just published right off of New Hampshire health costs. They said, here's what you charge for all these things. Here's the New Hampshire averages. And it's very unusual in this world that, you know, the folks with the white coats lose out to the bean counters at the health plans, but this was one example where they actually did. And they came to a negotiated settlement. And it is becoming more sophisticated and more timely. These are getting better. But the bad news is most people don't even know these sites are out there. If they do, they don't tend to go to them. Of course, the nature of much of care is such that this is not necessarily all that helpful. You know, it's not useful to go to this site if you're having a heart attack, if you're having severe abdominal pain, if you think your spouse has had a stroke. So they're not going to be that useful for those things. The other thing is a lot of this has been tied to so-called consumer directed health plans. You know, you've got a $5,000 deductible, you've got skin in the game, you want to think long and hard about what kind of care you're going to get. So we're going to make you think about it besides decide where you're going to get that MRI. And that's true. And that helps, but as much as that sounds like a big scary number to every individual, in the aggregate, that's where only a small fraction of help dollars get spent. The vast majority of help dollars are spent on people who blew way through their deductibles, okay? It's the people who needed, you know, $125,000 worth of cancer care. It's the people who needed that sort of thing on cardiovascular care. That's where the dollars are going. And so transparency can only take you so far. Also, concerned about price increases. Just as you might use it to shame a high price provider, also low price providers tend to come out and go, hey, look at this. I just found that we're the lowest paid people in your entire network. Don't you think we deserve a 25% this year? And the Federal Trade Commission has actually issued some cautions about how this might be used and how this might adversely affect health markets. Okay. All right. Actually, if there's any questions on transparency right now, I'll take it or we can hold it for the open session because now I'm gonna pivot to using health data and some of the health data work that we do. So I'll move into that. Okay. So all payer claims data sets. So an APCD is basically, it's just a big database. You just go to all the insurers and you get copies of their claims. So you go to Blue Cross and you go to Harvard and you go to Tufts and Anthem and everybody else and you go to Medicare and Medicaid and you get from them, who's a list of, here's all your eligible patients, here's all the doctors and hospitals in your network and here's all the claims we paid. Okay. This is how much dollars we paid. And you put that in one place. Conceptually, it's very simple, as you might understand. It's an enormous data set and you tend by getting lots of data from lots of different places. There's all kinds of issues about how do you normalize, regulate, clean, integrate that data. They've been around really for about 15 years. Maine was the first to have a really functional one and about 20 states now either have an APCD or have a very active program towards launching one. And it's often a very key part of the infrastructure. I mean, you go to a governor of a state and you say, governor, how many patients were treated for breast cancer last year in your state? How many people have depression? They're like, I don't know. I mean, I can call Medicaid and they can probably tell us how many Medicaid patients and maybe I can get the head of Blue Cross on the phone and they could dig up some data. But if you really wanna know, you can't know. There's no way to know. And you also can't know things like, well, of all the people with depression, how many have been prescribed antidepressants? How many are getting therapy? Does that differ whether you're in the Berkshires or the Cape, whether you're urban or rural? Does it matter whether you're on this insurance or that? And does this doctor do a better and cheaper job than that doctor, et cetera? So these are all things that are there. Obviously, privacy and security is a very important concern. You're getting very, very personal, detailed information about folks that goes into this database, okay? Fordy's spoken a little bit about why, what are the things you can do with it? But basically, from top to bottom, you start with public health questions. What are the trends in infectious diseases, cancer, depression, you name it, opioids, and drill all the way down to where is the best quality and the best price to be able to get this service and what does this imply for health policy and a million other questions for researchers? So this is a lot of what we work on. We work with states who are trying to build this. Often they are building this with an eye to integrating it with their health information exchange. That's the electronic medical record feed and say, okay, if we get the claims, you know what was paid for things, and we have the clinical data so we know whether people are getting better or worse. This is a really powerful way to really get an understanding of what's going on and what we're doing right and where we need to do better. And with that, I'm done with my slides and I would love to take this discussion in any direction that you guys would like to take it. Yeah, Scott. So you... It's on. Okay, you've painted dire pictures. Do you have any light to shine on? I've painted dire pictures about, in every area, is there a particular form of direness that you want me to address? Do you have any ways out of the mess? Do you have any suggestions for that? So let's start with price. Okay, you're talking about health care costs? Okay, so how do we get out of it? I think there are well-meaning people left and right who want to try to influence the health care market to work better. And I think what is generally understood is that it is a very strange market and it's really not a market at all. I used a metaphor of gasoline earlier. It's not like buying gasoline. And so there are approaches from the right where you really wanna stimulate additional competition and transparency can be a part of that and enforcing antitrust can be a key part of that. And that can work. There are approaches from the left that say either the cat's out of the bag or we're not really able to, even with our antitrust, we don't have strong enough enforcement, we're gonna have to have some other more regulatory approach such as administered pricing, which is one of the ones frequently talked about. So basically Maryland has gone to an all-payer system where basically they have a special waiver with CMS that every payer pays the exact same price for everything. So Medicare, Medicaid, and the commercial insurers all pay the same amount of money for an appendectomy and MRI, a bypass surgery. But in exchange for that, the state gets to set those fees. And so medical inflation in Maryland, it's one of the relatively high-cost states, but its rate of inflation has been below the national average. And so that's been under consideration, but Maryland right now is one of 50 states that's managed to do it and do it at least reasonably well. So there's not an obvious way out and we have this real conundrum because you'll frequently hear things which are they're not canards, they're exaggerated, but they're not canards when people say, oh, you can't tax the pharmaceutical industry because you'll just stifle innovation. And it is true, there's an unbelievable innovation. The advances in cancer care, the advances in treating hepatitis C, it's been nothing short of miraculous, but so have the profits also been nothing short of miraculous. And somehow we need to come to a better way of balancing it. And in the current political environment, I have a feeling we're gonna drift down a road of greater disparities and greater dysfunction until we either get into an economic crisis, a political rapprochement or something that then makes crossing that political barrier easier. Yes, back. This is sort of a business question. You were demonstrating the cost comparison sites, which is excellent. I didn't even know that existed until now. You have people who practically live on their phones. They look at WebMD, they look at a lot of sites that may or may not be reputable, but that's where a lot of people's eyeballs are. And you have a lot of healthcare apps. And is there some way that you can find way to disseminate that information to like where people, sort of like where people live? Not successfully so far. So I think there's a couple of issues. I think states are really good at certain things, but they're not especially good at optimal marketing, web optimization and web design, you know, quite honestly. That's not what state agencies do. So with all respect to Massachusetts and New Hampshire organizations that we have worked with and supported in this work, I don't expect them to be the app of the year, even though they're making these things mobile friendly, et cetera. That said, there are also private sector entities. There's companies like Vitals and Cast Light and others you may have heard of that also make transparency efforts, but I don't see people, you know, beating a path to their door either. So I don't know quite what it is. So one of the things is, yes, I'm sorry that you hadn't heard of this before. I'm delighted to have introduced you to it today. If we can replicate this to another, you know, 299 million Americans will be there. And I think we sort of have to get, I think we're gonna have to get there. But I don't have all the answers. And I think, you know, I'm not a web marketing person. So I don't know the right way to get this into people's hands. The Consumer Electronics Show, week or two ago in Vegas, they had a whole bunch of like connected health apps, but very few of them had anything to do with this. There were lots of wearables and lots of this and that, but there was very little on, you know, informing the consumer. I don't know when that's gonna change. And I think that has to do again with like market, you know, when is it in our individual interests to demand this information? And it is in all of our individual interests occasionally, but not a lot of the time. And I don't know, I would love everybody's suggestions here for how we can better leverage the incredible power of these resources to get them to have an effect in the market. Yeah, oh, I don't know, too. Okay, first to the left, then to the right. Hi, my name is Beth Kolko. I am a professor at the University of Washington and an affiliate here. And so a few years ago, I actually started a medical device company and it's like going through a rabbit hole. And I don't know, like I took the red pill or something. So my question is, there's this whole other pocket of pricing perversity that I know too much about. And I'm trying to figure out how to bring this conversation into the kinds of analyses that you're doing. So the pricing around pharmaceuticals has gotten lots of press. But it turns out the way the device industry works is almost like the mafia in terms of the lockdown of the contracts with hospitals. And so we make a, I started my company to make low-cost medical devices. And it turns out it's virtually impossible to get those into the market in the US, even when customers love them. And so I know plenty of other entrepreneurs who the innovation is amazing and there are these great low-cost substitution products. But the system, like the obstacles to getting them into the pipeline are unbelievable. So how would you bring that into the kinds of analyses that you're doing around policy and thinking about how to pull the market along? Is transparency a way to do it? Any thoughts on that? That's great. Thank you for that comment. I would love to talk to you more afterwards about some of your experiences there. So a couple of things. To a degree, transparency can help. You expose an, let's say, inefficient pricing practice. There's an opportunity to get at it and say something. But beyond that, healthcare is a team sport, but it also has a legacy of being a guild. And I think you're seeing a little bit of guild behavior going on there and protection. And that's clearly just a form of market dysfunction. One of the things in the Attorney General's reports in recent years has been around how the contracts between the payers and the providers are so convoluted that it's almost impossible to do innovative things. It's impossible to compare them. And so it's sort of really nobody's fault, but you've got a structural impediment to being able to really understand what's going on. And it sounds like, again, I don't know the history of this. Maybe this is nobody's fault and grew up this way or maybe it's indeed somebody's fault. But regardless, it sounds like you've got a real bit of market dysfunction there. So I would love to follow up with you afterwards if that's okay, thank you. Actually, no, the far back I think was going first. No, that's it? Okay, all right. Hi again, Sebastian, yes. I just had a question about the cost, depending on the size that you had mentioned in the answer to a question that was previously asked where you had mentioned research and the good research that's going on. Does the size of the institution, does that correlate with the amount of research they're doing? I imagine that smaller places are doing less research because they have less people on staff, so they have less number of hours to spend. Could that account for a portion of the higher cost because they're essentially defraying or they're using the healthcare costs to pay research agendas? Right, it does not appear to be. So I'm not relying on my work, but others who have examined it. So when you say research, biomedical research at our medical institutions, so the number one and number two US hospitals for getting NIH funding are Mass General and the Brigham and they are crown jewels of Boston's medical empire. And they do wonderful stuff. That said, the analyses that I've seen say a couple of different things. That number one, the institution takes a huge cut of that right off the top for its own overhead. So it's not so much that it's a money losing thing. You get whatever it is, I forget the number, it's somewhere between 40 and 55% of the money comes off the top to go to the institution that then covers it. So that's one of the big things. The other that's often been spoken about is teaching hospitals. Well, we have all these residents and fellows that we have to educate. But actually, for example, the institution that's got the greatest number of residents, certainly as a fraction of revenues, et cetera, is Tufts Medical Center. So it's not even these other ones. So yeah, it's absolutely true. The bigger institutions have more of those costs. But ironically, it may be some of the middle sized ones that suffer more because they may get less out of the NIH and they may have to bootstrap their own research a little bit more. But that's sort of a separate thing, that's sort of a separate bucket. What we should do is just take those costs out. So okay, what are the actual costs? Let's just create a separate entity. Let's just call, you know, this is provider organization service enterprise, provider organization, research enterprise. What are all your costs in there? Let's figure out how to pay for it. That's a societal good. If we need to figure out a way to divert certain funds to make sure that you're whole on that, let's do that, okay? Also, they get property. So I mean, for folks, you know, I also do some work in biopharma and that's the leading pipeline for biopharma. So, you know, one of our big academic medical centers, you know, made more than half a billion dollars out of Enbrel, you know, when it hit the market because they owned all the patents to it. So, you know, you got to put that in the mix as well as part of the total costs of research. Yeah. You shared a slide with us, which talked about socioeconomic parity. Yes. Are you a proponent of that, or do you see that translating into the real world? Are you talking about the reverse Robinhood? In terms of purchasing power parity, in terms of managerial talent. Oh, oh yeah. So, are you referring to charging a different premium for employees at different levels? I think that's a perfectly good idea. And I think many companies have voluntarily adopted that. Having also advised some companies who've done it, it's like, it's never easy. It's like, where do you put the cut-offs and how do you do it? And it raises administrative stuff. But the principle of it, I think is sound. But of course, that's the choice of the individual employer as to how they want to structure their benefit. You don't see that becoming a mandatory state reform. I don't see any political will to go in that direction. And not sufficient to make that required. I see that being purely voluntary from the perspective of an employer. The equivalent of that in the exchange are the premium subsidies. And so, you get a decreasing premium subsidy going up to 400% of federal poverty if you're buying an individual policy. And so, I have no crystal ball that tells me what the ACA is gonna look like six months from now or anything. But at least right now that is enshrined in current law. Yeah, over here. One of the things that I agree with is the idea that prices need to be more transparent. But if you're walking down the street, fall and break your ankle. It's unlikely you're going to pull out a smartphone and look up the hospital that has the lowest cost for a broken ankle and the ambulance service that has the lowest cost to take you there. So, individuals have very little to do with negotiating most of these costs. It's the larger employers who are negotiating with the insurers. So, how do you see transparency as having some effect on that? And could you also make a mention of the facility fee which has a lot to do with this as well? All right, if I lose track, you'll remind me of the two. I'll start with the facility fee first. So, a clever little bit about medical billing is if I'm in my doctor's office and I see you for a routine visit and I say charge $150 for it and maybe the insurance company pays me $100 for it under the contract, that's swell. But now, I sign a contract and I join XYZ Hospital Corporation, okay? Now they designate my office, same space, same place. It's now an outpatient clinic of XYZ Hospital. Now I get to charge my $150 for the visit plus a facility fee, okay? And it's just magic extra money. And that's part of what has underwritten why lots of physicians have agreed to be purchased by hospitals because you can just make a bigger pie. You've added nothing to productivity, you've added nothing to anything. And so now people are trying to stamp that out but when you've got a stream of revenue that's there, somebody's income, so it's hard to make it go away but it's of no efficient use. Your other question though about the role of transparency, absolutely right. You can't use it in the moment for many sorts of care. And I think it has two ways of working. One is simply by getting it out there so that on the margins, you know, well the best hospital for me to go to is X and oh and behold, I broke my ankle today. Hey, by the way, why don't I go to hospital X? And that will work on the margins, okay, to some extent. But I think the other thing is does it get captured into policy, either whether it's governmental policy or the choice of private sector players when they are buying benefits. So for example, the state of California pursued a technique in insurance called reference pricing. And in reference pricing, what they said was, when we need somebody who needs a hip and knee replacement, the cost vary hugely like the numbers I'd shown you. I can't quote you what they were in California but they were a multi-fold variation. And some of the famous institutions of course are the most expensive. So California did a whole bunch of things. They looked at quality. They said there's no difference in quality here. We're only going to pay X dollars for anybody who wants a hip and knee replacement. If you go to a hospital that costs X plus one dollar, that dollar's on you, any extra dollars on you. And they announced this. And what happened was almost immediately those high-priced hospitals said, whoa, wait a minute, wait a minute, we can work with you on this. And they dropped their prices down to X or substantially close to X. And so transparency just by putting it out there, again, I had the mistaken notion that if you build it they will come and all kinds of 1,000 flowers will blossom. It doesn't. You've got to pair it up with other things. I'll give you another example in a different sector which is pharmacy. So there's a lot of very, very expensive drugs that are out there right now. You can get injectable drugs that are miraculous for treating all kinds of things at costs of $3,000 a month, $10,000 a month, crazy stuff. And what the drug companies have done, they're no dummy, is they say, well, we're going to make it really, really expensive. But if you've got a health insurance plan that say for these drugs, you're responsible for $1,000 out of pocket, and they realize nobody's going to pay $1,000 out of pocket, they'll give you a special coupon, you can apply, you get a coupon, and they waive the copay. And basically what that does is, if their drug was, say $12,000 a year and they got the insurance company is actually only going to pay them $6,000 a year and the rest was supposed to be on you, they still get all six grand from the insurance company and they get you to use it. If they don't give you that coupon, they don't get any money because you're not going to get the drug at all. And so from a consumer perspective, they say, oh, isn't that nice? It's a compassionate use program. I wouldn't have access to this before, but it's not. It's totally manipulative pricing. All it's done is it's artificially put a floor on the price and basically made it so that the insurer basically has to sort of cover a drug that would never have covered before. And so many people have stated, and I happen to think this is an interesting idea, that those should be illegal, that you are not allowed to waive that, okay? And so what that does is, and the consumer are going to say, oh my God, that's outrageous. This is terrible. Then your rich executives are going to get the drug, but nobody else is going to get the drug. Yes, at the first pass, that's true. But at the second pass, they've got to come back and say, then we need to come up with a way of making this at a reasonable price so that this is affordable. But that's a really risky strategy. And if you're a bean counter at a health plan to try to advocate that I'm going to take away all your rheumatoid arthritis and cancer drugs from you, tough place to be. So it's only going to happen if there's a lot of support from different quarters. Over there. I had a different question, but what you just said prompted me to ask, what do you imagine are mechanisms for bringing about that second wave? So can't we imagine that if it's left to market forces entirely, and it's really risky to roll it out, but it'll correct, what are you imagining are the mechanisms that would create the correction so that it doesn't become, effectively people who have the means or are desperate and go into debt will pay for those drugs? It's really tough. And I think I'm not a lawyer, obviously, but the issues of regulation are really hard because if I had to bet on markets or regulation, I'll bet on the markets. What I mean by that is the markets will find a way around regulations. They'll find ways of exploiting the loopholes in it. They'll find the hysteresis in that system and take advantage of it. And so if you're gonna pursue a regulatory approach, it has to be really flexible and dynamic. And I think, frankly, that's part of why Maryland's experiment in one pair has been successful because they have very broad powers to do things, and they're now bringing it to a total budgeted care. So one way of doing it, as you've certainly heard before, is to transition from paying fee for service for all these things to paying for value, paying for a bundle. And then you take it out of the hands of merely the mean insurance company and let it go into the hands of you and your doctor about what's really the best option here. That'll help, but it's gonna take hard work. And I think, again, we need to have some very dynamic policy responses because we're not just gonna have a conclave, we're gonna write some new regulations and go home and declare victory. Ain't gonna work. You've had, well, let's go here so it's a new question and we can come back. Hi, I'm Kathy. I'm a fellow here at the Bergman Center. One of the parts of your talk that really struck me was the equalizer part and how healthcare or in health care is not an equalizer. So how do you fix that? What are some ways we can help mitigate that for folks? Well, I think the biggest one is you have to attack provider price variation. So it is simply unfair that community hospitals and particularly community hospitals in lower socioeconomic areas are being starved. And they are therefore just not able to provide not only the perks like a nicely done lobby and some valet parking or a parking lot that's not a piece of garbage over somewhere but actually also have that as well as a happy nursing staff and great physicians who are happy to work there. You need to get at that and that's dying. And I'll put a footnote on that by the way. Inpatient care in general is dying. You may remember from one of those early slides, inpatient care is the one where the volume is going down. Less and less is done on an inpatient basis, more and more on an ambulatory basis, including lots of surgeries, but all kinds of other things. So when I say hospitals, think of it as your medical care center. So not just the inpatient hospital, but that whole thing. But communities are drying up on that. And those at the top have been very savvy about opening satellite clinics in the right places to try to siphon away lucrative business. So we really do have to find a way of going after the provider price variation and bringing it in. Those of you who follow Beacon Hill, there's been a law proposed that is meant to squash that provider price variation. They basically are going to raise payments to all the hospitals who are below a certain fraction of average and basically take money away from the top two or three or some number of providers in order to fund that. It's very controversial. You can imagine who's lobbying for and against it. It's not clear whether it'll go through, but I think it's a move in the right direction. And our governor has openly stated that he's in support of some sort of legislative fix in that direction. Just a quick question on a high profile issue, which is buying up low-cost drugs and then raising the price astronomically. Is there anything that can be that you can conceive of that will stop that type of behavior since it's certainly shame, doesn't it? So yeah, we all know the name Martin Shkreli. Martin Shkreli, say what you will, he's a brilliant, okay? You know, he's got a lot of guts. He put in like a 1500% price increase because he could and it's legal, okay? He's going to jail because of financial fraud and other weird stuff, but what he did with that drug was 100% legal and it's being copied by many other people. So the answer has to be that there's got to be some way of changing the regulatory structure and there's that balance. We want the FDA to be really strict and not allow anybody in unless they prove beyond a shadow of a doubt that this is a really high-quality product. On the other hand, you'd like them to let somebody in really quickly in a case like this and say, yeah, we want a generic competitor. Come on, it's a 70-year-old drug for goodness sake. So again, the markets are cleverer than regulators and so you really need dynamic regulation. And I'm afraid we're in a situation now with such dysfunctional federal government in particular that we're not there. I have a dear friend on Wall Street and I had a conversation with him some time ago and he says, I love bad policy. And I said, what do you mean by that? And he says, that's when you can make the most money. So question over here. Just really quick. How hard is it to get access to the APCD data as a non-government entity? I'm looking at it right now. So you do have to go through it. There's a formal process of the states that have it. Not all states, but most states will make it available to bona fide researchers. They typically have got a review commission. So you have to put in an application, put in specifically what you want to use it for, which data elements you need. It goes through a formal review. You have to agree to a data use agreement and obviously certain privacy and security protections. There's often a fee involved too that you got to pay for the data and then you can get it. Again, I'd be happy to talk with you offline on the processes on that. I think we have time for one more question. All right, right over there. I'd like to know your perspective on some of the alternative payment models right now, like bundle payments and accountable care organizations. Do you think they're working or what's your take on it? That's a great question. Alternative payment models. So bundled care, global payments, et cetera. They're not working as we want them to yet, but they are absolutely necessary for part of our transformation. They are necessary but not sufficient, if you will. And so for example, Blue Cross implemented its alternative quality contract, which became sort of a national model, which ties a whole bunch of incentives for excellent care even while giving physicians and hospitals responsibility for the total budget of care. And they appropriately got a lot of credit because they were able to do this in a big way and get a lot of uptake. They also appropriately got a lot of flack because a lot of the early people who signed up, they gave them very, very large budgets. So they basically said, historically, you spend $450 per member per month, we're gonna be a budget of 480. So you don't have to work very hard to stay within that budget. So it didn't really bend the curve around things. But I think it's still, as I said, a necessary but not sufficient step to getting us towards future things. I'm disappointed that we're backing away from some of the CMS mandatory demonstrations in bundled payment for surgery, because I think those are actually really great ideas. And it changes the dynamic. But we also have got to get, we're finally really close to the CUSP where 10 years ago, the hospital CFO was awake at night, worried that his beds were empty. We need them to be awake at night, worried that the beds are full, okay? And we're in the middle of that transition. So we're getting there. We're getting, they are working, they're not working completely as designed and sufficiently well, but we're just gonna keep pushing ahead. And so again, I would call out very much, there is a critical role for the federal government, we lead here. The biggest payer in this country is Medicare, okay? That's the one that throws the weight around when we need Medicare to continue to push ahead. And they have in many areas. They've withdrawn on a few fronts, but they've continued to push ahead on others. All right. Thank you all very much. Thank you.