Transparency

Scaling the Limits of Scale: The PBM Path to Value-Based Health Care

Scaling the Limits of Scale: The PBM Path to Value-Based Health Care
Scale has its limits, as the nation’s two largest pharmacy benefit managers (PBM) are discovering.  Express Scripts and CVS Caremark each process more than a billion prescriptions a year.   That is not enough for big customers Anthem and Aetna.  Both are likely to alter dramatically or not renew long-term contracts set to end in 2019 with the PBM behemoths.

PBM Optionality for Anthem, Aetna

Anthem and Aetna say they now have “optionality” because Cigna and Humana, which they are respectively acquiring, both have PBMs.  That optionality goes well beyond the scale Aetna would enjoy as the fourth largest PBM.  It can put the pharmacy benefit, integrated within each organization, on the path to value-based health care.

Both the Humana and Cigna PBMs align well with the quality and outcomes focus of value-based health care.  Humana’s PBM primarily supports the company’s Medicare Advantage (MA) and Part D programs, with MA accountable care arrangements delivering better outcomes than traditional Medicare.

Meanwhile, Cigna has pioneered outcomes-based reimbursement arrangements with pharmaceutical manufacturers.  Previously overseeing Cigna’s PBM was none other than Aetna CEO Mark Bertolini; Cigna CEO David Cordani will serve as chief operating officer of the new Anthem.

In their sights is UnitedHealth Group (UHG), which brought its PBM business inside from Medco at the start of 2013, trigging Express Scripts’ anticipatory acquisition of Medco in 2012.    UHG says its OptumRx PBM focuses “on connecting total condition spend and pharmacy’s impact across benefits,” a process it calls “synchronization.”

More explicitly than Anthem, Aetna has said it will integrate Humana’s PBM, along with its “growing health care services business,” even characterizing it as an “Optum-like business.”

Value beyond Scale

UHG’s Catamaran acquisition earlier this year, while adding scale, also significantly included Catamaran’s RxClaim processing platform.  OptumRx plans to integrate the adjudication platform with its medical and pharmacy claims synchronization.  UHG promises to create value “beyond the scale … resulting from integration,” by linking “demographic, lab, pharmaceutical, behavioral and medical treatment data” to encourage healthy decisions and improve compliance with pharmaceutical use and care protocols.”

In fact, the very tools used to leverage scale to get lower prices, such as formulary exclusions, can potentially work against reducing total costs.  In securing a substantial discount from AbbVie for Viekira Pak, Express Scripts excluded Gilead’s Harvoni from its 2015 formulary.  Viekira Pak is a four pill a day regimen to Harvoni’s adherence-friendly one pill for curing hepatitis C.

Not surprisingly, given their focus on overall costs, Aetna, Anthem, UHG and Cigna all included Harvoni on their formularies and do not publish exclusion lists like Express Scripts and CVS Caremark.  Instead, they typically establish clinically based prior authorization criteria.

For the latest high-cost drugs to hit the market, Express Scripts is following the health plans on their value path.  Instead of excluding one of two new anti-cholesterol drugs, known as PCSK9 inhibitors and list priced at $14,000 per year, it announced coverage for both this week.

As the health plans did with Harvoni, Express Scripts will implement rigorous prior authorization procedures.  The company says it negotiated good pricing with Amgen for Repatha and with Sanofi and Regeneron Pharmaceuticals for Praluent, enabling it to cover both drugs.  Perhaps it also heard from customers unhappy with price-driven drug exclusions.

Wanting More, Customers Become Competitors

Clearly, some very big customers – Aetna, Anthem and UHG – want something more than scale from traditional PBMs like Express Scripts and CVS Caremark.  Beyond scale, they want a pharmacy benefit that contributes to reducing total costs through better outcomes, consistent with achieving overall value-based payment goals.

Building PBM paths to value-based health care for themselves, Anthem, Aetna and UHG will also sell against volume-based models like those of Express Scripts and CVS Caremark, and against health plans that fail to integrate pharmacy and medical claims for actionable intelligence.

Employers and the Limits of Scale

Their strategy blueprint could easily have come from the Harvard Business Review article “The Limits of Scale.”  Hanna Halaburda and Felix Oberholzer-Gee argue that, when rapidly scaling companies neglect to take into account differences among their customers, performance declines.  On that premise, they suggest how challengers and incumbents can take advantage of customer differences.

Among PBM customers with differences are employers, which provide health coverage for 147 million Americans.   The National Business Coalition on Health is uneasy with the growing use of exclusionary formularies.  It advises members to “base selection criteria for formularies on clinical outcomes to ensure that pharmaceutical costs do not decrease at the expense of rising medical costs.”

Employers are becoming more actively engaged in managing the pharmacy benefit, even developing their own formularies and negotiating directly with pharmacy retailers.  Caterpillar’s Daren Hinderman told an NBCH panel last year, “I don’t want to have a conversation [with PBMs] on rebates; I want to have a conversation on how I can keep my employees more compliant with medications they need to stay healthy. We decide what’s best for our employees. It’s a transparent process.”

NBCH also urges members to “verify that pharmacy and medical benefits are aligned, and link data between the two in order to evaluate cost and outcomes across both types of benefits and the entire health-care spectrum, not just through the lens of pharmacy.”  As Dr. Mark Fendrick of the University of Michigan Center for Value-Based Insurance Design told the NBCH panel, “I’d prefer to spend more on statins than on stents.”

Obstacles on PBM Value Path

Mapping the PBM path to value-based health care is one thing, building it is another.  Aetna and Anthem still must face a gauntlet of government and legal reviews before they can complete their acquisitions and commence integrating the Humana and Cigna PBMs.

OptumRx must complete its integration of Catamaran, which in turn is still integrating the data platforms of its acquisitions.  Furthermore, OptumRx and Catamaran both use different versions of the RxClaim platform and, for Catamaran, medical claims synchronization remains down the road (or path).

Meanwhile, the Catamaran acquisition has roiled a PBM industry where many participants use Catamaran’s RxClaim platform – including Cigna!  They were content to compete with Catamaran, despite using its technology.  However, will they be similarly comfortable with OptumRx and UHG in the technology driver’s seat?

Much like UHG’s acquisition of Catamaran and its technology, Rite-Aid did the same when it acquired EnvisionRx.  The PBM had previously acquired Laker Software, also a claims platform supplier for many PBMs.  Again, the comfort question arises, in this case over Envision and Rite Aid as the drug retailer pursues its path to value-based health care via innovative alliances with health care providers.

Making the Laker and RxClaim platforms particularly valuable has been the PBM industry’s reliance on a hodge podge of decades-old, antiquated platform technologies.  With each acquisition, scaling PBMs have patched together instead of invested in their platforms to maximize short-term synergies, at the cost of limited flexibility and lower efficiency.

PBMs Miss Technology Revolutions

Meanwhile, multiple revolutions have coursed through the systems development world since the PBM industry acquired its mainframes and data centers in the late 1980’ – early 1990’s.   When relational databases followed soon thereafter, PBMs adopted them for after-the-fact data analysis, but not broadly for real time use with claims processing platforms, which now are antiquated and fragmented.

More recently, graphical user interfaces have greatly streamlined the programming of business intelligence applications.  It is now easier for more people, more efficiently to translate their expertise into innovative systems.  No longer must visionaries exclusively funnel their solutions through highly specialized programmers and coders.  Now, the visionaries’ can become coders, their hands on the programming controls, unleashing new applications across the entire economy, including the PBM industry.

PBM Platform for Value-Based Health Care

One such visionary has developed a PBM solution for value-based health care.  His name is Ravi Ika.  “The solution is holistic, unlike that of any other existing PBM.  It reduces overall pharmacy cost, converts specialty from ‘buy & bill’ to ‘authorize and manage,’ and lowers avoidable drug-impacted medical costs,” explains Ika.

Before turning his attention to the PBM industry, he created a comprehensive, integrated payer platform now provided by ikaSystems, which he founded to transform the payer operating model.  Spanning all payer departments and business lines, it decreased administrative costs for health insurers by as much as 50% and reduced avoidable medical costs.

In 2013, Ika launched RxAdvance, a full service PBM, which similarly operates on an integrated, end-to-end platform – one designed specifically for value-based health care.   Combining pharmacy, medical, and lab data, the platform – called PBM Collaborative Cloud– enables real-time engagement.  This engagement occurs with physicians at the point of care, pharmacists at the point of sale, and patients via mobile cloud.  It also engages payers clinical and pharmacy staff through their workflows.

Better decisions by these stakeholders – driven by platform-generated, actionable intelligence – can reduce avoidable drug-impacted medical costs, optimize utilization, facilitate better specialty drug management, and decrease overall pharmacy costs.

PBM Processes Reimagined

“We started with a clean slate,” observes Ika, who says he and his team reimagined PBM processes to streamline workflow before building the platform.  Redefining the human role, they automated as much as possible while, on the other hand, increasing opportunities for engagement, what-if modeling, and informed decision-making.  The platform also enables market and regulatory changes configurable by the business user, as well as system-driven compliance management.

Ika built the platform from the ground up using a unified data model.  In information technology parlance, that means the platform’s standards are universal enough to encompass a large scope of data and types of data with high scalability.

In PBM language, the platform includes everything from pharmacy claim adjudication, formulary management, benefit design, enterprise reporting and analytics, to pharmacy network and rebate contracting, medication adherence and therapy management, specialty management, transparency, compliance, and adverse drug event management.

From Existing to Ideal Formularies

For example, the platform includes algorithm-driven artificial intelligence to manipulate, with plan sponsor engagement, the complex and interdependent variables associated with formulary management.  Incorporating habitual member and prescriber utilization patterns, in addition to other data, it derives an ideal formulary with optimal financial and clinical outcomes.  The system then maps a transition plan from an existing formulary.  The platform also accommodates an unlimited number of formularies and supports real time dynamic modeling and changes coupled with full transparency.

Better Medication Therapy, Adherence Outcomes

For medication therapy management (MTM), the platform taps patient medical claims and disease conditions, against which the system overlays a prescription listing for easy use by prescribers.  In addition, each new prescription triggers a dynamic analysis to determine patient eligibility for a comprehensive medication review (CMR), which the system prepopulates for efficient prescriber use.

After the CMR, RxAdvance advisors rely on system alerts to intervene with patients to ensure medication adherence.  For high-risk patients, RxAdvance will install an electronic, patent-pending pill station at their residences and resupply it with disposable pre-filled pill trays.

Integrated with and wirelessly connected to the company’s platform, the device assists with monitoring adherence and vital signs.   The company says the device has improved adherence to more than 93%, including patients with multiple chronic conditions who are taking an average of 15 medications a day.

The Centers for Medicaid and Medicare Services (CMS) recently underscored the PBM need for physician-led, point-of-care MTM capability when it announced a new Medicare Part D MTM model.  Currently, highly fragmented PBM MTM relies on pharmacists “chasing” patients without closing the loop with prescribers, thus failing to secure meaningful health outcomes, according to Ika.

Ika points to the RxAdvance specialty management program as another example of his platform’s capabilities.  As it does for MTM, the platform integrates prescriptions, medical claims and disease conditions to create an action plan for all stakeholders.  Case managers use a dashboard to prioritize their outreach to patients, prescribers and pharmacists.  Because the platform integrates medical, pharmacy and lab information, it helps facilitate appropriate utilization.

Risk Sharing

One of the hallmarks of an organization configured for value-based health care is its ability to share risk.  The RxAdvance unified data model platform enables it to share risk for both pharmacy and avoidable drug-impacted medical costs.  For pharmacy, it is prepared to assume both up and down side risk based on its cost management performance against a risk cap set below a national benchmark projected increase.

The company can also compute a baseline trend for avoidable drug-impacted medical costs using prior years’ medical claims data.  RxAdvance and its client then set a target and, if the PBM lowers actual avoidable drug-impacted medical costs, it will share in the savings.  According to Ika, this sort of risk sharing is unique in the PBM market.

Ika reports that RxAdvance is currently implementing full PBM services for three clients, replacing national PBMs.  “The Collaborative PBM Cloud platform is making for a very smooth launch,” he notes.

RxAdvance has gotten a head start along the PBM path to value-based health care, scaling the limits of scale.

Obamacare High Deductible: Build It So They Come

corn_field

“Where do you want to get your MRI,” Dr. Barry Yeaman asked his patient.  “I don’t care, wherever you want me to do it.”  The Norman, Oklahoma, family physician tried again.

Dr. Yeaman told his patient about price differences in Norman and nearby Oklahoma City, where the cost of an MRI can vary by as much as a thousand dollars or more.  The patient still was not ready to make a decision.

“Patients still defer to the provider.  I see it nonstop,” Dr. Yeaman explained to a panel of health care executives convened by HealthLeaders media.

Will They Come?

Build it and they will come?  Not yet.

Here we have Obamacare’s next big challenge – not in the courts, but in the rapidly expanding consumer marketplace carved out by high deductible plans, whether on a public exchange and from an employer.

As many as 36.9% of those under 65 with private insurance coverage were enrolled in a high deductible plan last year, according to the National Center for Health Statistics.

This year, nearly 90% of those who bought health insurance on a public exchange enrolled in bronze or silver plans,  most of which have high deductibles.

Typically combining both medical and prescription drug expenses, the deductibles far exceed the IRS high deductible definition of $1,300 for an individual and $2,600 for a family.

Next year, all 30,000 employees of the Carolinas Healthcare System will have only one health coverage option – a high deductible plan.  It will require individuals to pay up to $5,600 and families up to $11,200 a year out of pocket in deductible, copays and coinsurance.

With their own money at stake, consumers theoretically will shop for better prices and higher quality, thus forcing health care to deliver greater value.  Fact is, such consumers are about as real as ball players emerging from an Iowa cornfield.

The better answer is “build it so they come.”

Underinsured and Unable to Choose

A few consumers do come to shop, believing they know something about health care, only to be thwarted by opaque and unavailable pricing, even when required by law, or surprise bills from providers they have never met.

However, like Dr. Yeaman’s patient, most consumers are unable to choose.  Facing tight budgets, many simply buy less of everything instead of choosing needed medications over optional skin cream, according to the Rand Health Insurance Experiment.

In another example, employees at a company with a new high deductible plan cut back on prescription drugs.  They did so although the high deductible did not apply to the pharmacy benefit.  The National Bureau of Economic Research suggested employees were unaware of benefit design details and possibly skipping physician visits.

For a significant number of consumers, whether they have the skills needed by today’s health care shopper is beside the point.  They do not come to market simply because they do not have the money to participate.

According to the Kaiser Family Foundation, 37% of U.S. households do not have enough liquid assets to meet individual and family deductibles of $1,200 and $2,400 respectively.  Doubling the deductible levels increases to 49% those who do not have enough liquid assets.

As many as 31 million adults with employer provided coverage were underinsured last year.  High deductibles alone put 7 million in that category, according to a Commonwealth Fund study.  Half had problems with medical bills or medical debt.   Meanwhile, the Consumer Finance Protection Bureau reports that half of all overdue debt on credit reports stems from unpaid medical bills.

Last year, among adults fully insured with a public exchange plan, one in four reported they went without some needed medical care because they could not afford it, according to a recent Families USA study.

The High Deductible Squeeze

Health care organizations across the nation are feeling the impact of high deductible health plans.  According to Crowe Horwath, insured patients’ bad debt and charity rates were up 22 percent and 130 percent last year in Medicaid expansion states, and 35 percent and 130 percent in non-expansion states.

The Advisory Board reports that Healthcare providers are collecting $0.18 to $0.34 on the dollar from patients with high-deductible plans.  Once a bill exceeds 5% of household income, payments are nearly zero.

Last year, when Federal Express instituted a high deductible plan with health savings accounts, Methodist Le Bonheur Healthcare in Memphis was running $17 million behind budget by the end of the first quarter.  Some hospitals like St. Luke’s in Kansas City are insisting on 25% prepayment.

Drug companies are feeling the pinch, too.  According to the Families USA study, 14.2% of those newly insured on the public exchanges went without needed medications because of high deductibles and copays.   Up to 16% of cancer patients quit their treatment plans because they cannot afford out of pocket costs for life-saving oral cancer medications, according to a recent University of North Carolina study.

Even clinical pathology labs are seeing revenues decline as more patients in high deductible plans fail to pay their bills.  Labs like Arizona’s Sonora Quest Laboratories have begun asking patients to pay in advance, as they aim to collect millions they had previously written off.

Health Care Responds

Health insurers and employers are responding with new, value based benefit designs that encourage consumers to make wise health and financial choices.  These plans typically lower consumer out of pocket costs for services that support better health, such as prescriptions for chronic conditions.  University of Michigan researchers studying such a plan used by Connecticut state employees suggest there is better control of chronic conditions.

Writing in the Boston Globe, one of the researchers explains that value based benefit plans “rely on consumers to understand their benefit design and evaluate different costs for various services.”   Betsy Cliff admits, “That kind of consumer education isn’t routine.”

However, some organizations are making impressive attempts.  Kudos go to the American Gastroenterological Association (AGA), for example.   As a template for all-in colonoscopy pricing, it is using the pricing sheet – known as the Monroney sticker– pasted on new and used car windows.   Meanwhile, MetroHealth System has put a 38-foot RV on the road in Cleveland staffed by three financial counselors to answer consumer questions.

Last week, the American Society of Clinical Oncologists issued a new framework for evaluating cancer treatments based on cost, effectiveness and side effects.  Last year, the American College of Cardiology and the American Heart Association issued their own statement on cost/value methodology.

Three SEO Keys

Across health care, leaders and communicators must challenge themselves to build a less complicated healthcare marketplace so consumers will come and shop.   Here are three SEO keys for doing so:

  1. Simplify the Market:  Bundle, package or just better organize quality measures, outcome data, pricing and billing.   Like the AGA, look to other industries for simplification strategies.  Be transparent, accessible and responsive.
  2. Educate the Consumer:  Before they become patients, teach consumers how to become good healthcare shoppers.  This is a job for every part of health care, not only payers.   Like Cleveland’s MetroHeath, go into the community.
  3. Offer Options:  For those consumers who do not have enough money, even if insured, provide them with low or no-cost options for health care and prescription medicines.  Identify and meet other needs to enable healthy choices.

Whether a baseball field, website or the healthcare marketplace, “Build it so they come.”

King v. Burwell: 12 Keys to Effective Communications

Supreme Court - King v. BurwellIn King v. Burwell, if the Supreme Court rules for King, as many as 11.7 million Americans will wonder how the decision affects them.  That’s right – not just the 6.4 million directly affected, but everyone who gets coverage through an exchange, state or federal, subsidized or not.

They will be looking to their insurers, physicians and hospitals for answers.   In fact, even some of the 169 million Americans getting coverage at work may also wonder, so their employers should brace for questions, too.  For most Americans, there will likely be more confusion than clarity.

Yes, policy wonks, political operatives and health care insiders already know the justices could eliminate subsidies in the 34 states using the federal exchange, hitting southern states the hardest.  They also know that the subsidies, averaging $268 per month, reduce premiums by an average of 72% to about $105 per month.

However, the entire issue will be news to most Americans when the decision comes down, especially if it is for King.  In fact, as many as 37 percent of voters do not know or have no opinion on the case’s core issue of subsidies, according to a Morning Consult national survey released last week.

The justices could hand down a decision any day.  So, if you are a physician, hospital, insurer, or employer, or engaged with patients and health consumers, prepare to communicate.

Here are 12 keys to effective King v. Burwell communications for your organization:

1.  Convene a high-level, cross-functional response team to assess the decision’s impact, identify affected stakeholders and their concerns and develop a response strategy.

2.  Establish a set of guiding principles to align actions and communications with your organization’s mission, values and brand promise.

3.  Develop key messages based on your guiding principles to help all stakeholders clearly understand your organization’s approach.

4.  Decide as soon as possible whether your organization will support state or federal policy solutions that will restore subsidies.

5.  Create a communications map illustrating how internal and external stakeholders will present or receive questions to ensure all gaps are closed.

6.  Provide general explanations to patients, members, employees and consumers regarding how the decision does or does not affect them, based on their state, insurance type and any subsidies.

7.  Address, one-on-one, individual patient concerns regarding continuation of care and ability to pay. (If you are a provider, see HFMA for guidance.)

8.  Help patients and consumers develop personal response plans, utilizing available community, government and private sector resources.

9.  Encourage patients to maintain care until they speak with their physicians and develop a personal response plan.

10.  Ensure employees and partners have a ready answer to initial questions based on the key messages, plus guidance to refer patients, members, friends and neighbors to your website for more.

11.  Meet immediate patient and consumer needs for information with a quick response and ongoing follow up, internally and externally, via statement, spokesperson and website.

12. Adopt a transparent attitude, responding as completely and forthrightly to questions and requests for information.

A free planning tool is available at Planning Effective Communications on Climbthecurve.com.

From Hospital Whispers to CNN Transparency

St. Mary's Medical Center

With a whisper, a staff member at St. Mary’s Medical Center in West Palm Beach, FL, broke the medical omerta.  Confiding with a patient family, she revealed problems with the hospital’s pediatric cardiac surgery program.

Later, a member of that family overheard a worried mother in an elevator, asked if the mother knew a child with a heart problem at the St. Mary’s and, on hearing yes, passed along the whisper.  The mother and her husband called their daughter’s cardiologist, who agreed with the second whisperer’s advice:  Move your daughter to another hospital.  They did.

Whisper Now a Shout

Several years later, the whisper is now a shout.  On Monday, CNN broadcast a heartbreaking story on infant deaths and complications following pediatric cardiac surgery at St. Mary’s, a Tenet Healthcare facility.   The report featured young Layla McCarthy playing on her family’s deck despite two legs paralyzed since her heart surgery.   Layla’s mother, Christine McCarthy, was the worried parent in the elevator.

St. Mary’s chose to limit its participation in the CNN story to a written statement, refusing interviews or on-air appearances.  However, it is now releasing additional information and is getting public support from families whose children had successful surgeries.  Parents Pierre and Angela Rodriguez call Dr. Michael Black, head of St. Mary’s pediatric cardiac surgery service, their “miracle doctor.”

The CNN story claimed the St. Mary’s program had a mortality rate of 12.5% from 2011 to 2013, well above the national average of 3.3%.  However, over a longer period, the Florida Agency for Health Care Administration reports a lower mortality rate of 4.58%, more in line with a state average of 3.97%.   Since April 2014, when St. Mary’s received recommendations from a Florida Children’s Medical Services site visit, the hospital says the mortality rate has been consistent with the national average.

Ultimately, the facts will sort themselves out.  St. Mary’s will continue defending its program and Dr. Black with additional information.  In addition, the McCarthy’s and other families have filed lawsuits.  It is also too early to grade St. Mary’s engagement with CNN and other media.

Secrecy Veiled Worlds

However, in light of this story, our nation’s hospital and medical communities would do well to examine the extent to which they operate in secrecy-veiled worlds, separate from patients, families and consumers, but for the occasional whisper.

When CNN asked St. Mary’s to provide mortality rate data, CEO Davide Carbone responded that raw mortality data “does not give proper context for the complexity and severity of each case, which could potentially lead to providing misleading information to consumers.”

He has a point.  The problem for St. Mary’s is that we now live in the new transparocracy.  Increasingly, transparency forces organizations to change behavior, practices and policies ahead of legal or regulatory requirements.

Instead of refusing to provide mortality data because it might mislead consumers, organizations like St. Mary’s need to work at making such information available and understandable.  Resistance to transparency will ultimately be futile, especially as other hospitals post their own outcomes data.

In Kansas City, Children’s Mercy Hospital publishes its pediatric heart surgery outcomes on a website.   Its Ward Family Heart Center reports data according to procedure complexity using the standards of the Society of Thoracic Surgeons.  Mortality rates for the most complex procedures are slightly higher than the national average, but Dr. James O’Brien, the center’s chief, explains, “sometimes our outcomes won’t be great, but we will continue to share our data.”  Children’s Mercy is the hospital with several hundred patient and family advisors actively involved in decision making across all services.

St. Mary’s should take heart from Children’s Mercy because the defect known as hypoplastic left-heart syndrome featured in the CNN story has a high fatality rate, according to the Palm Beach Post.  Since at least April 204, St. Mary’s has been reporting data to the Society of Thoracic Surgeons database like Children’s Mercy.  Therefore, St. Mary’s should have the same data available for posting on its own web posting, and it should do so as part of its strategy for recovering from the CNN story.

The Whispering of Surgeons

Meanwhile, not even a whisper about St. Mary’s came to Florida consumers by way of the state’s medical establishment.  However, there was much “whispering” among Florida’s pediatric cardiac surgeons.

Johns Hopkins professor, Dr. Jeffrey Jacobs, wrote in his April 2014 report on the Florida Children’s Medical Services site visit to St. Mary’s “it is common knowledge that multiple pediatric cardiac surgeons…have express concern about babies having complex pediatric cardiac surgery at St. Mary’s,”  adding that “concern exists across Florida.”

However, patient families told CNN they were unaware of the issues.  They also said St. Mary’s did not  provide them with information on pediatric cardiac surgery outcomes.   CNN reports one family remembering Dr. Black saying he had never lost a single patient at St. Mary’s, although CNN indicates several prior patients had not survived.

Some level of confidentiality about problems like those at St. Mary’s makes sense, but only for a time, to provide space for corrective action.  In fact, Dr. Jacobs did not include in his report confidential information he received from St. Mary’s as part of a peer review process.

Time to Raise the Veil

However, once St. Mary’s became the talk of Florida medicine, the time surely had come to raise the veil and inform at least the parents considering heart surgery for their children.  During Dr. Jacobs’ April 2014 visit to St. Mary’s with his colleagues, someone should have asked St. Mary’s what it was telling families.  In addition to checking whether St. Mary’s was reporting data to the Society of Thoracic Surgeons database, the review team should also have asked whether the hospital had any plans to post the data on its website.

As patients and their families are becoming more actively involved on their care teams, thus playing an important role in improving care, they can only do so with full information.  Transparency has thus become a standard of care, subject to review as much as any clinical practice.

Instead of whispers, rather than shouts, let patients, families, providers and physicians communicate openly, fully and transparently.

10 Steps to Transparency in the New Transparocracy

Transparency in the New TransparocracyTransparency is creating a new world, triggering organizational change on par with the transformative evolutionary effect more than 500 million years ago of light penetrating the oceans.  That is what Daniel Dennet and Deb Roy of Tufts and MIT respectively conclude as they view today’s digital revolution through the Cambrian lens of In the Blink of an Eye author Andrew Parker of Oxford.

Writing in the March edition of Scientific American, Dennet and Roy suggest that when organizations, like Cambrian animal life, “find themselves exposed to daylight, they quickly discover that they can no longer rely on old methods; they must respond to the new transparency or go extinct.”

Surviving Cambrian creatures developed camera style retinas, nervous systems, claws, jaws and shells, as well as predatory and defensive strategies.  Successful 21st century organizations will adapt their “organs” for delivering goods and services, as well as modify externally facing functions such as public relations, marketing and legal, according to Dennet and Roy.

Change is Changing

Earlier this month, Panera Bread became the first national restaurant company to publish a No No list of artificial colors, flavors, sweeteners and preservatives it has eliminated or intends to remove from its menus by the end of 2016.  “The No No List is the latest step on our journey to clean food and a transparent menu,” said the company’s founder and CEO Ron Shaich.

A regulatory bureaucracy did not order the change.  Nor did it compel Chipotle to eliminate GMO ingredients, Pepsi to stop using aspartame, Kraft and Nestle to drop some artificial dyes and McDonald’s to use antibiotic-free chicken.  Like Cambrian creatures, they responded with new policies, procedures and practices to transparency’s light and the altered competitive environment it creates.

They and other organizations are adapting to what I call the new transparocracy, i.e. government, rule, power, control (-ocracy) by light (-par-) shining through (trans-).

Within this new transparocracy, the “nature of change is changing,” as explained by Accenture’s Mark P. McDonald.  Now inherently social, the change process begins with dissatisfaction, followed by a demand for information and ensuing transparency, choice based on the new information, and change “in the face of clear information that drives active choice.”  This is, according to McDonald, instead of the traditional process by which change occurs: problem, solution and adoption.

Adapting Organizations

Some companies began taking adaptive steps more than 20 years ago amidst the right-to-know environmental movement, a harbinger of transparocracy.  In 1988, Monsanto’s CEO, Dick Mahoney, issued the Monsanto Pledge, an environmental manifesto that included a commitment to reduce legally permitted air emissions by 90 percent in five years.  With progress publicly reported each year, Monsanto achieved the goal by its self-imposed deadline.  The company also made its product material safety data sheets (MSDS) – 1,200 in all – publicly available.  In 1996, Mahoney provided a retrospective and “lessons learned” in Anatomy of a Public Policy Crisis.

For an evolved adaptation to the new transparocracy, we need only look to Nike.  Facing intense scrutiny of supply-chain labor practices, the company embarked on major changes beginning in the 1990s.  Nike found that simply pressuring suppliers did not achieve enduring change.  Instead, it needed to base change on real business solutions driven by strong market signals, according to CEO Mark Palmer.  In other words, organizational structures at the local level had to adapt.

Parker says Nike “suspected that a new model was being born – one that would tap into the wisdom of diverse contributors, where collaboration was more important than proprietary secrets. We learned to view transparency as an asset, not a risk.”   The company has now moved beyond having a responsive corporate responsibility team to an adaptation-supporting sustainable business and innovation team.

Further pushing the adaptive envelope has been Tesla’s Elon Musk.  He announced via a blog post last year that Tesla “would not initiate patent lawsuits against anyone who, in good faith, wants to use our technology.”  Musk explained that he created Tesla to accelerate the advent of sustainable transport, and that making its technology open source, rather than defending patents, would advance that goal.  He added that technology leadership depends on the company’s ability to attract and motivate the world’s most talented engineers.

Health Care Transformed

Meanwhile, throughout the 17% of the US economy represented by health care, reformers are intentionally deploying transparency to drive change.  Several weeks ago, AARP, Aetna, the National Consumers League, the Pacific Business Group on Health and other organizations launched the Clear Choices Campaign.  Their aim is to put more health cost and quality information in the hands of consumers and the developers of transparency tools for consumers.  They also support competitive health markets.

Once consumers become patients, having chosen where to get care, transparency comes into play again fundamentally to change the physician-patient relationship model.  Transparency makes it possible to involve patients as full partners in decision-making, explained New England Journal of Medicine executive editor Gregory Curfman, M.D., at an October 2014, seminar sponsored by the journal and the Harvard Business Review.

Hospitals increasingly are engaging patients and their families in helping with the redesign of care – as detailed in my last article.  At Children’s Mercy Hospital in Kansas City, a 2012 policy change “placed patients and families at the center of decision making.”  Now, Children’s Mercy has more than 300 advisors embedded on committees, task forces and teams throughout the hospital.  In North Carolina, Vidant Health integrates more than 150 advisors on teams and committees.

Across the economy, every organization will need an adaptive strategy for the new transparocracy.  As Dennett and Roy observe, the old protective interfaces between organizations’ internal affairs and the public world are losing their effectiveness.   “We can now see further, faster, and more cheaply and easily than ever before—and we can be seen,” they explain, adding, “The players who cannot adjust will not last long.”

Steps to Transparency

In developing their strategies, organizations should consider these ten steps to transparency:

1.   Make mission “true north:” This is the “why” of your organization, establishing your reason and right to operate, not a slogan or tagline. Align all your practices and behaviors with it.  Some organizations also use their business model as a public reference point for their performance.

2.   Prioritize your focus: Considering your mission and business model, identify those areas, e.g. supply chain, menu ingredients, health cost and quality, where greater transparency will have the most positive impact.  Proceed area by area in order of importance.

3.   Redefine privacy boundaries: Certain information must remain confidential, such as personal health and market-moving information, as well as critical privacy needs.  Narrow what this information is and who gets it internally.   Then, identify transparency zones within the organization for both employee and public.

4.   Provide understanding: Add perspective and explanation to the information you release, both internally and externally.  Anticipate how the public and employees will receive and question it.  Provide answers up front.

5.   Deliver accessibility: Make your information easy to find and use, for example through a central point on your website. Ensure it is timely and current, and the public can count on it.   Provide vehicles for feedback and questions.

6.   Monitor and respond: Track how your information flows through digital space.  Monitor your website metrics and social media.  In real time, identify issues that can be resolved with more information, more comprehensible portrayal or more easily understood explanations.  Fully engage in the social media conversation.

7.   Recruit and Include: Embed consumers, customers and other stakeholders on work teams, task forces and committees.  Engage volunteers; hire some to serve as the external voice, internally; and recruit others for short-term intern-like roles.

8.   Modify practices and behaviors: Capitalize on the feedback, conversation, reaction and dialogue your information triggers.  Improve products, policies, practices and procedures accordingly.

9.   Restructure the organization: Adapt your organization, setting priorities, instituting process and allocating resources. Reduce hierarchies and foster the collaboration among employees and with the public that accompanies greater transparency.

10.   Manage the transition: Prepare a detailed roadmap for your transition to greater transparency.  Carefully consider and communicate the reasons for more transparency. Link to your mission, relevant past history or new external circumstances, especially if you are contradicting prior disclosure resistance.