Hospital Impact: CMS transparency rule is a step toward consumer-centric, market-driven care

For more than a decade, industry executives from leading facilities have acknowledged behind closed doors that they know their organizations are unsafe. Image: Getty/monkeybusinessimages

The world of healthcare delivery is becoming more transparent. Efforts by consumers, the government and private institutions to make price and quality data available are growing. Increasingly, for non-emergent care, consumers want to know how much a procedure will cost, and they want to compare providers’ quality, safety and outcomes records. They want transparency, with essential information provided in a way that facilitates comparison shopping.

The Centers for Medicare & Medicaid Services (CMS) is taking a step to increase transparency and address critical consumer safety issues. A draft rule set to be published this week would require private hospital accreditation organizations to publicly release details about problems identified during hospital inspections. This information and the steps the facilities would need to take to address them would have to be posted within 90 days of a report to the facility.

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Healthcare consumers have a right to this information. Almost 90% of hospitals are overseen by private accreditors—not directly by government regulators. And medical errors remain a leading cause of death and injuries in U.S. hospitals, with estimates starting at nearly 100,000 people a year dying due to such mistakes.

The status quo for hospital oversight is not working

While the media and Washington have been fixated on access to insurance, quality- and safety-related issues have not garnered the same level of attention. Why is this? It appears that when it comes to care, key stakeholders assume quality is a given. Unfortunately, the medical error statistics suggest that this couldn’t be further from the truth.

Each year, CMS does its own inspection of healthcare facilities to validate the work of the private accreditation organizations. The agency has reported that state inspectors frequently found “serious deficiencies” that were not reported by private reviewers. In the agency’s language: “This continued trend of high disparity rates from FY 2012 to FY 2015 raises serious concerns regarding the [accrediting organizations’] ability to appropriately identify and cite health and safety deficiencies during the survey process.”

CMS is right that accrediting organizations are easy graders, rarely giving the hospitals they oversee anything less than full marks. As ProPublica reported last week, of the 4,018 hospitals listed on the website of The Joint Commission (TJC)—the largest accreditation organization—more than 99% have full accreditation. Only seven are designated as not having met full requirements.

Part of the gap between high marks received by hospitals and safety performance as seen in medical error statistics comes down to what accreditation organizations measure. Too often there’s a focus on micro-level details that reflect form over substance. Critical elements that are more closely connected to outcomes like accountability mechanisms and processes for understanding and addressing undesired variation in quality should be the focus.

Another issue is the way most hospitals and accrediting organizations view each other. As a “voluntary” reviewer, TJC claims it is in a difficult position. Its business model depends on being paid by the organizations it’s accrediting. Many hospitals want a stamp of approval, not a real assessment of their shortcomings and areas of needed improvement. However, accrediting organizations like TJC have been designated by CMS to act in an oversight capacity, so they should be held to a high standard for carrying out this duty, regardless of how the money flows.

Transparency can bring about change

For more than a decade, industry executives from leading facilities have acknowledged behind closed doors that they know their organizations are unsafe. But they have not taken the actions required to fix the issues—largely because they haven’t felt pressure from CMS or the market to do so. This kind of transparency is likely to change that.

There is precedent for the new CMS rulemaking. Several years ago, CMS took steps to post government inspection reports online for nursing homes and some hospitals. Those government inspection reports offer a description—often detailed—of what went wrong. This information enhances transparency and provides all healthcare consumers with access to quality and safety information to inform decision-making about where to get care.

In the face of this new push by CMS, the industry has two options. The first is fighting for the status quo—the default position of some organizations that want to preserve the dying business model as long as possible. That’s a short-term salve, but not a long-term answer.

The alternative will be led by those hospitals that have already taken steps to do the right thing. As more information becomes available, leading organizations have an opportunity to differentiate themselves by providing and publicizing transparent information about cost and quality, including outcomes of interest to patients (e.g. length and quality of life, recovery times, and complications). This is step one on a journey toward further differentiation; that path also includes offering fixed price options and guarantees to payers and ultimately to consumers.

Of course, this information can’t just be available—it must be usable. In the coming age of greater transparency in healthcare, adequate focus must be given to ensuring the information is accurate and presented in a format that’s easily understandable and actionable. Only by meeting each of these requirements will greater transparency have the potential to yield better health outcomes at lower costs. 

The current private accreditation model is not doing enough to protect patients. When the reviewers are on site, everyone in the hospital is on his or her best behavior. Once the surveyors leave, there’s a group exhalation and a return to business as usual. To make the future of healthcare market-driven and consumer-centric, we need to focus on getting to transparency for price and outcomes, accountability for achieving those outcomes, and finally creating a competitive environment. This move by CMS is a step toward that goal.

Rita E. Numerof, Ph.D., is president of Numerof & Associates, a firm that helps businesses across the healthcare sector define and implement strategies for winning in dynamic markets.