Open-Book Management for Health Care

One of the great mysteries in the health care system involves trying to asses what care really costs.  Many of the thought leaders in the reform movement are convinced that more transparency in pricing and cost will allow consumers (read patients and payers) to comparison shop and use basic economic pressures to obtain value.  A great idea.  What about the pressure on providers to deliver value?  Wouldn’t it make sense to have the  providers on the front line equally educated with respect to price and cost?  If providers understood price and cost they would be in a better position to provide value to the consumer.  Most front line providers (physicians, nurses, others) are as equally in the dark as patients and payers with respect to price and cost.  This information seems to be locked away in an administrative vault somewhere.

Open-book management is a strategy in which the financial information of a business is shared with employees at every level.  The concept was originated in 1993 by a business author by the name of John Case who worked for Inc. magazine at the time.  It  gained popularity when a then manager by the name of Jack Stack and a group of employees purchased a failing business unit within International Harvester and transformed it into a successful venture.  Mr. Stack went on to write about the experience in two books: “The Great Game of Business” and ” A Stake in the Outcome”.  Mr. Stack stresses a culture of ownership.  One of the main themes is that if employees are engaged, educated, encouraged and have equity in the outcomes then you have leveraged an important aspect of success.  A nice summary of the key points in the later book have been outlined by a business consultant by the name of James Altfeld and are available as a pdf file here.  If the concept of open-book management sounds good start with this review.

Is the timing right for open-book management to be applied to health care?  If providers knew the cost factor associated with each process and piece of equipment and office supply it would likely be eye-opening.  Many expensive habits and routines could and would be abandoned.  Even in the world of evidence based medicine and comparative effectiveness research the cost factor must be understood.  If research demonstrates that two treatment are equally effective but there is a significant cost differential then cost should be the deciding factor.   Every provider must first and foremost do what is best for patient outcomes and only providers are in a position to decide what is best.  Why not empower the same group with cost and financial data as well.  It just makes too much sense.

While some have described a downside to open-book management there seems to be no reason, other than protecting turf, that this methodology should not at least be trialed with physicians and other health care providers.

If it works with those on the floor of the factory is there any reason to think that it wouldn’t also work with trained health care professionals?

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