more out of pocket. this isn't a trial on a specific issue, but is seems to me the more consumers are being asked to shoulder the out of pocket burden, not just through premiums but truly on a case by case specific health care treatment and by health care treatment basis, would it seem logical to follow the transparency is more relevant in the trade secret laws to shield consumers and it's less of a legal claim. i love to get your thoughts. >> that's right. i think the more that what we see happening is valuable information that is vital to competition in the marketplace, that's vital to consumers being able to make decisions on who is a higher value. i think public policy

weighs heavily in not offering protection. the massachusetts general attorney did a large study a number of years ago and a lot of information was disclosed to the massachusetts ag that claims claim secret protection. they found it was against public policy to in light of trade secrets considerations and protections that have been claimed for that information. they held it was in the public interest to disclose the information they found anyway. so i think that you're exactly right. when we think about consumers in the market and the impact that this is having on them, the public policy is going to sway in the other direction. as we start to see more aco's develops and more bundle care and providers have a larger burden of determining -- we only have a certain amount of a patient and we have to make referrals to

different providers. it's going to be important to how much it costs so they can keep their own cost down when they're thinking about making referrals. it's not going to be just patient that needs this information, but it's vital for the provider to make that decision going forward. there's a number of different ways of addressing these barriers and it's true legislation. one of the first thing that has been tried to address the contract terms and either prohibit gag clauses or previsions in these contracts. california has done this through sp 57 recently. 751 prohibits gag clauses once an individual is in a plan. sb 57 went onto prevent gag clauses to hhs qualified entities.

they prohibit any clauses that would ban it. so -- they don't require to disclosing to anyone outside the public once you've enrolled in a plan accident so you , so you may not know how much it is when youen role. it's important to know how you want transparency in the system. do you want it at the point of treatment system and all of those are useful, but it's important to think about where that comes in. while these bills -- so you may want to go -- while these bills do help promote price transparency, you may want to go one step forward and mandate disclosure of certain kinds of information or disclose a broader range. another possible legislative move would

be to simply settle the trade secret issue and say, pass legislation saying that health care price information does not constitute a trade secret in certain instances or certain kinds of health care information cannot constitute a trade secret as a matter of law. and that may be another way to go about resolving some of these issues. president mar. >> as we were discussing the kaiser services going on. we brought it to the board level for further discussion and this was some revelation of that data, but kaiser systems wasn't divulgeable because of a gag on ready or a trade system that was being disclosed. it could go from the patients to the health board to the board of

supervisors, where do you think is the protected information where people could understand it and it doesn't seem to be protected as a trade secret? >> i think there's different levels of where you can offer that disclosure. certainly in the kaiser instance, at the level at the board of supervisors and hsf in making decisions about what kind of carrier purchasing accident i think transparency is great to help you decide how much you're going to pay. there's ordinances that i have to make sure to insure that the board of supervisors can see that. it's important to realize that there's different claims. something protected by a contract clause that's separate from the trade secret argument. if you're bound by a non disclosure agreement, the trade secret argument, you're subject

to braech of contract if you break that. that's a supplement of that. if you remove the gag clause, you still have the trade secret argument, so you have to deal with them. i think you want to inject some transparent -- the most amount of transparency at the level of the board of supervisors and hsf and establish what you think is absolutely necessary for patients to find out as well. >> i think that's a great example of how we did bring it to the budget and the board of supervisors and i think what has occurred is bet he transparency and i thank you kaiser for negotiating it, but we had to bring it to the board level to have that discussion to encourage transparency from kaiser and the other institutions as well. thank you for the great example.

>> beyond my legislation you have the option of regulation. regulation can be done by the department of manage care or done by the department of insurance and things you might think about is requiring full disclosure of prices in order to be eligible to offer a plan in san francisco or offer a plan in the exchange. you might tie them to rate increase or tie it to a rate increase at a certain level. those might be options to promote disclosure and get that information out there. that's another option. the third option with respected trade secrets is to test them in litigation. so there's a couple of ways to do this. you can disclose information that someone had claimed trade secret over and wait to see if they file a claim against you, but more lawful way of doing that is to make a request to

get that information to a california public records request and if the request was denied then test the clause and appeal. there's other ways to do that. so we've addressed with the legal barriers are to to gaining price trans transparency and some of the possible solutions to that, in a final note, i want to reiterate that was said by the people before me which is that above market prices arise not from just a lack of price transparency, but from the market leverage that drives cost up and keeps these prices secret. that's where this is coming from is the exercising of the prices. if you don't fix it, you may not get the results you're hoping for which is lower cost. a viable solution needs to do two things, it needs to break down

the existing market leverage and there's different ways that that could be done. that needs to be tried and then secondly you need to implement price transparency that disclose both price and disclosure information and i think mrs. aboca addressed that as well. with those two, i thank you for your time. >> thank you professor. you can applaud. >> one of the things that we talk about continues by the city of san francisco and how we sit here today and a lot is -- there's federal things and there's state -- a lot at the state level. just talk about what you think we can do here in the city of san francisco. we talked about premption and

where we can poke and where we can't as a city. >> i will briefly address it. i'm not an expert. i really have to be careful on anything i say. i think to the extent that you can claim home rule immunity on the things you're trying in san francisco and suggest that this is an area that is really localized to san francisco whether it's health care plans related to city ask county employees, things that are truly local to this area, you think you'll have better luck and i think everyone -- i think the nation as a whole is poised for price transparency initiative, but everyone is trying different things and waiting to see and it would be wonderful to have a pilot system from the city of san francisco to step up. there's

things to do that won't run a foul of what has happened in california. you may receive some push back on some of that, but to the extent that you keep it narrative on what's happening in san francisco accident i think you can make great public arguments about why this is an issue for the city and it provides information for the state going forward and my basic understanding of pre-' em gs law, is it is very case specific and healthly swayed by public policy. i think that the things you could do is try things like requiring disclosure for plans negotiated here and set up a disclosure for city and county employees. things like that, i think you'll have a much better -- >> thank you very much professor. i appreciate you being here for all your hard work. and best of luck in the next few months. >> i'm going to go pass out

now. >> okay. up next is professor raps. want to invite ann mccloud up who is the president of the hospital. thank you for being here. >> good afternoon and thank you for having me today. as senior vice president for hospital, cha represents more than 450 hospitals throughout the entire state of california. we're happy to be here today and we applaud your efforts with the goal of reducing health care cost. i they we striving for that -- i think we striving for that and your folks said, achieving that aim. we're supportive of that. i want to say that i hope my comments

today aren't perceived as not being supportive of transparency, and they're not. i hope they provide you with a balance perspective on what transparency may or may not do. when we talk about the fundamental issue of price in health care and we heard that used interchangeable three throughout the morning, price, cost, price, cost. they're two different things in hospitals. we have to work it disintangling cost from cost. i'll put it in the perspective of the airline industry. when we're searching for an airline ticket, the price we see is the cost to me, the consumer, the purchasers, not the cost to the airline and its service partners that need to deliver the product, me in a timely and safe trip from point a to point a. similarly when we talk about price and price transparency in health care,

generally we're talking about describing the price service to a purchaser, not the cost it takes to deliver that product to the recipient the service. so there lies the problem. airlines do one thing, they fly people from point a to point b, but many hospitals do more than provide a unit of service such as a knee replacement. they provide emergency services to those who cannot pay. they conduct ground breaking research and they train the physicians and the health care professionals of tomorrow. these are services that have great society benefits, however they are costs. the consumers and the purchasers don't recognize when making purchasing decisions. hospital prices are also affected by the uniqueness of the communities they serve throughout california. we have micro

economies, geographic differences and the patients served and the level and discount of charity care provided to the uninsured and under insured throughout the state. and hospitals have higher share of care provided by programs that have low reimbursement plans. and because many of those costs are not paid for in full by anyone, hospitals must make up the difference by cost difference. so a singular focus on price,

therefore misses the larger picture of the unique differences in the community served by hospitals. it's the same issue that plagues both were discussed, the narrow network delivery or the reference pricing delivery models. they focus on price. so institutions may try to increase their volume with a payer or a health plan by doing the low priced services in a contracted narrow network or reference pricing, but this just shifts the cost to other payers. it doesn't lower the cost of providing to need. it does nothing to address the underlining cost driver. i think the professor is gone. i'm perplex by his comment and i may choose to followup with

him. impressive credentials shared information about the escalating hospital prices over this period of time and he solely blamed the reason on competitive concerns. it's disappointing that an academic professional didn't share the full information. the drivers in health care includes the substantial work force shortages across the spectrum of professional and technical position and driving up labor cost to california having the highest cost in the nation and san francisco having the highest labor cost in the state of california. in addition, unfunded government mandate. the most strict staffing ratios in the nation, seismic

compliance in california cost hospitals $110 billion in increased cost exclusive of financing costs. >> one of the things i think when i talk to professor malnic or ask a break down of the cost, perhaps it would be great to do work together to say what the cost are. i don't think he was claiming it was 100 competitive or lack of competition base. he said we can get that break down for you. whatever the line items are, let's work on that. >> happy to do that. >> data is data and we should focus on the reality so i look forward to that conversation. >> i will reach out and make sure that we do that. >> great. >> as we talk about costs, i would be doing a disservice if i failed to mention the chronic and acute funding of government

programs. medical in california fails to cover $5.2 billion a year in the cost of care provided to this low income population. those are costs, real costs. medicare fails to cover $3.8 billion in the actual cost in hospital of a providing care to the elderly. >> can i ask a question about that. i don't dispute that, however, as we're talking about transparency, it affects -- maybe this is not the case, but everyone the same, under funding the mandate affects hospital a or hospital b depending on their patient mix, it's something that plagues all of us, how's that. >> correct. >> i appreciate the perspective

from the health care provider and insurance provider, but if we're talking about -- i take it from the consumer perspective. again, if i'm being the case of -- if i'm being asked to pay 20 percent of my x-ray, it seems logical that as those shifts -- it's not just my premiums that i'm worried about, but it's premiums plus out of pocket. i want to know, hey, you know what and as professor king and i hope she's doing ok, at the time i choose my plan and at the time of procedure, to know what health plan and what provider is going to provide -- i want to know if one is charging $1500 bucks verses 100. that's viable to know. to me that speaks towards transparency that everyone

should be okay with. again, all the issues that you talk about that plague the system and why health care cost are increasing, i don't think that cuts across transparency or says no to transparency. it's a fact of life and i get it and again i want to look at that data and the under funding from the government, i get it, but still when you talk about transparency, you're talking about hey, and you know what, if the certain mixes of -- if something cost more and we've talked with kaiser and i'm sure will address the integrated cost management that they plague in their services and i spoke with them and i appreciate them to talk about what happened this summer, allocate that to the cost of a knee replacement. it should be fair to get services that you

provide that affect the cost of a knee replacement. it's not just the knee replacement, but it's the nurses that take care of you and the followup care. what's fair is fair, but i imagine that doesn't seem to me that cuts across saying, we should be able to -- we should share that information so people can have choices. >> i think you make good points. i want to go back to the point you made about medicaid and medicare. all hospitals have that same issue but they don't have all the same share. you can have pockets in your city where there's vulnerable populations or elderly population where the hospital has a share of the care and that is the overall expenses. >> what i really worry about is that people have the lower cost or the lower share of the

med-cal patients and still charging the highest prices to consumers. that's being taken advantage of that i worry about from a public policy perspective. i believe it's a great thing and we shouldn't hide from real facts and i appreciate what you're saying, but let us take that into account as a city, as a government that those hospitals that are providing higher charity levels, we understand why that happens and we need that in our city, but that doesn't mean we don't want to see what's being charged in terms of prices for consumers. >> in addition to medicaid and med-cal offices, many of them have teachings like you see with san francisco general, they will bare an incredible a of additional cost to support

those programs that really ultimately benefit the entire state, but quite frankly in california's case, an entire nation because we do a poor job of training those physicians in california. good back to those reference pricing, they don't lower cost. they shift them and they actually kind of ex asser bait this issue. i don't think that it's the best finance structure example around, but the cross sub sti -- substidi that we have is a dell indicate balance and if we start forgetting to address that there is a delicate balance and there's issues that has to be addressed. failure

to recognize those cost drivers that include those benefits, it places no value on those hospitals that restore the health to the sickest patients. maybe they don't see a lot of med-cal, medicare but they're your trauma centers. maybe it's a children's hospital or some other -- >> i don't disagree with that at all. those things provide benefits. we're so lucky here in san francisco, not only all of the hospitals, but uc in terms of a research institution is unbelievable worldwide and we're lucky it's based here in san francisco. but outlining what those cost are, we shouldn't hide from them though. the cost, again, again i get it. maybe you talk from a perspective area or maybe the state takes a look at that and

we have a broader policy discussion, but i understand everything you're saying and i agree. nothing you're saying doesn't say we shouldn't provide the data and we shouldn't have it in the public. >> i think we're on the same page. we're not oppose to transparency. it's important if we put the price of an item, there needs to be a back story to tell the purchaser or the consumer or equalize that price or share -- >> absolutely. that needs to be done together. >> perfect. if there's going to be this focus on price, that it must coincide with an evident from our health and policy leaders to recognize the cost of the entire system. and find ways to identify appropriate ways for paying for them, otherwise we'll be approached by the consequences of policy gone awry. thank you

for having me. i'm available for any questions and i hope we can continue the dialogue and provide more information. >> i appreciate that. and let me say, what you're talking about and making sure that we account for as a public policy organization here in san francisco but state and national about all the additional benefits, the research and so forth, i think we need to do that and we would be sticking our head in the sand if we don't. at the same point i don't think -- i think it seems like you agree, out of fear of not doing that well enough that we should stick their head in the sand about the prices and what we're charging people and especially it's a valid point, especially as an consumer, we're asking ask to shoulder the burden more and more we need that. i don't think anyone will disagree. i'll make the commitment to do both. >> i want to add one more

thing, suzanne. i think she left. deblonco from cpr, they're pushing payment reform and new models and we couldn't agree more. we think the way to reduce cost in health care is align the incentive among all provider and we have to move away from delivering care to managing health and looking at the whole picture and then we get away from the unit cost and we can talk about that. >> supervisor mar has a question. >> thank you for being here and having our local hospital council here as well. when we were discussing the efforts to phase saint likes hospital which is in the southeast part of the city in the mission district and federal health cpnc hospital, there's discussion about the fair share

of a particular hospital for charity care and serving low income populations and i'm wondering, what does your council do to insure that the members are doing their fair share and i know it could be estimated at -- in different ways but that was a big conversation when we were approving the cmnc campus. what do you do to insure there's that equity and we're lucky that supervisor david campos and others have advocated for health care equity on a city wide level looking at a master plan in our city, but what do you do at the state level to insure equity and that fair share of serving the low income and the fair. >> that insurance is done at the community level by every individual hospital and we have very robust now federal and state laws relative to charity care, financial assistance policies, even transparency that we didn't talk about today, but there's significant transparency laws in

california. where the accountability happens is at the local level. all of these non profit hospitals are creating a health needs assessment and that determines what are the needs of the community and then simultaneously, they prepare an annual benefit report. hopefully the community is looking at the report on what the hospital did verses what the community needs and hopefully those match up. but that's where that comparison needs to happen is at the local level. thank you. >> thanks very much. mr. smith. we're going to have comment -- public comment in a minute. at this point i'll ask kaiser to come up and thank you for being here and for your continuing to work with the city of san francisco in our service system. >> thank you very much farrel and mar. it's a privilege to