Modern Healthcare – August 19, 2019

(Michael S) #1

34 Modern Healthcare | August 19, 2019


‘The key is going to be


providing information


that’s actually helpful’


MH: What’s your perspective
on the Trump administration’s
proposal on price
transparency?

Dahlen: Price transparency
is certainly worth pursuing.
It’s one element of a
free-market solution to
healthcare challenges. That
said, the degree of difficulty
in implementing something
that’ll actually help
consumers is pretty high.
Mayo Clinic has been—
and will continue to be—
supportive of transparency
efforts. I certainly understand
the president’s interest in
creating a transparent market
with informed consumers.
But I think the key is going
to be providing information
that’s actually helpful to
them.
Given the third-party
payment design of
healthcare financing, a
consumer knowing either
the billed or contractually
discounted price of a
procedure, or a day in the

hospital, or whatever it
is, won’t likely move the
dial very far in my view.
Because the difference to the
consumer—his or her out-of-
pocket expense—is probably
relatively small.
On the other hand,
transparency of contracted
rates will certainly be helpful
to competitors to gauge
each participant’s price
position. We don’t know
which direction that takes,
prices go up or down. It
could certainly lead to higher
prices.

MH: Talk about how it might
lead to higher prices.

Dahlen: If it’s known that
others (in the) market
have a price advantage,
in other words higher
pricing, that will become
part of the dialogue and
the discernment in the
negotiations for all other
market participants.
And different market
participants have different

market relevance. Those
with high market relevance,
that perhaps didn’t realize
they were priced differently,
may try to take advantage of
the new knowledge
they have to press prices
higher, resulting in an
overall price increase on the
market.

MH: When the final rule came
out to post chargemaster
prices, how big of a burden
was that for Mayo?

Dahlen: It’s fair to say it was
a reasonable amount of
work, and in a concentrated
period of time. But we did
post 100% of our prices in a
machine-readable format,
as required. Candidly, I
don’t believe that effort
accomplished very much
in terms of supporting price
transparency.

MH: Is there something
else when it comes to price
transparency that you believe
might be a better approach?

Dahlen: It’s not an answer
to everything, but I am
encouraged by some of the
work underway on episodic-
based pricing, because
case prices are readily
understandable and useful to
consumers.
As healthcare providers,
we’re accustomed to case
pricing with the Medicare
program. Although their
design is based on average
cost and pricing, it limits
the ability of differentiated
providers, like Mayo
and other academics or
specialized care providers,
to price highly complex or
serious cases appropriately.
In other words, not all cases
are average and moving
to an average doesn’t
necessarily result in fair or
equitable pricing.

MH: At your hospital in Albert
Lea, Minn., the labor and
delivery unit has been top of
mind for some people. Why
did the staffing shortages
ultimately force the early
closure of that unit?

Dahlen: These are trained staff.
They all want to be part of
something that’s sustainable
and has a future. If you’re a
trained and skilled OB nurse,
and you like practicing in
that field, you like helping

Mayo Clinic is in a period of transformation as it catapults its flagship Rochester, Minn.,
campus into a hub of economic development and reacts to the continued pressures
facing rural healthcare. Amid all that, the system’s leadership is figuring out how the
Trump administration’s latest proposed rule on price transparency, which would require
hospitals to post their negotiated rates, will affect Mayo and, ultimately, patients. Modern
Healthcare finance reporter Tara Bannow interviewed Mayo’s chief financial officer,
Dennis Dahlen, to discuss his mixed feelings on the latest price transparency push,
among other front-and-center issues. The following is an edited transcript.
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