that you look at. from my perspective i'm focused on san francisco and the health of our city and the heath of our resident and the health of how economy here in the city and our budget as a city. we talk about -- you talk about maybe you'll get into it more - a lot about competitive nature and of course, everyone would agree a more competitive environment should produce lower costs. but how much do you think just generically speaking is -- we do live in san francisco in the bay area and it's an expensive place to live and it's more of a cost for hospital not only to exist in terms of the land value, but it's more expensive to build here. we saw from the building cost with the cpc hospitals are big. you have to pay higher wages and as a city

we have a lot of values associated with san francisco where we're willing to pay higher wages to workers in our city because we believe in that. how do you think about the differences and maybe it's part of a melting pot but i like to get your perspective. >> we could measure all those differences so we can do analysis that shows differences in prices, how much is due to the cost of living and that's factor prices inputs, but the more general answer is a competitive market, you know, will protect consumers to insure that the services they're getting are the most efficient and if they have the information, the ones that they want at the quality level they want at the service leave he will they want and folks move to san francisco on live hee expect to pay more for things so we're not talking about price level, but we're talking about the most efficient price everywhere. so you need market

structure and information to insure that. as you can see here in the period -- in the second time period here, total hospital spending in the california grew by 140 percent. if you look at the blue bar, you can see -- that's the one on the left side. you can't see it. volume grew by 9 percent, so we spent more than 140 more on health care and nine was due to volume. we were spending more than double. the cpi during that time period was 40. so prices which is what's left more than doubled during that time period or almost doubled, not quite doubled during that time period. and that's due in large part to the lost of competition in the hospital sector. >> all right. here's your california -- here's your los angeles, san francisco

comparison which gets, i think at the point you were mentioning. so this looks at the cost per day in the hospital in california for 2011. and what medicare pays and what commercial payers pay and this is adjusted by cost of the living. medicare pays more. for whatever reason, cost per day is higher in san francisco under the medicare program. if you look at commercial payers, they pay much more in san francisco than los angeles. well, one the main reasons is los angeles is a much more competitive market. within 30 miles of usc, there's 70 different hospitals and there's not so much systems so the plans can negotiate to keep prices down. they can pick this hospital and that hospital. they're not forced to take and some markets they are , and that's why prices

have gone up. at the bottom you can see this kind of summary measure is in san francisco, commercial plans pay 240 percent of medicare and in los angeles it's close to 200 percent. and that points to the differences in regional competitive structure. can what be done? policies to provide a market. some of these were talked about your earlier speaker. we need to go through and i think we're going to need regulations to restore structural competition and this is just some of the things that we would need to do. basically opening up choice, allowing consumers, employers and health plans to choose where they want to go without having to include others in the network, other terms that have evolved over time. we're going to need regulations to do that because

we need to set the rules for the marketplace so the marketplace can work well. also be aware of aco, which is this new emerging structure which has the great potential of enhance provider potential. if you go the aco, you should have competing aco, but it's not clear to me even if you do that, we may face concentration in the market and make it have gains but in the long run i worry about being able to drop a contract with one aco which has a large share of your members moving them some where else, whether that's going to be viable or not as a way to keep prices down. >> just so i understand that because i think what a lot of what we've done in san francisco and sitting on the health board, we were amazed this year, our blue shield rates were flat year over year which comparatively is amazing. i think in large part was the

discussion around the aco's and the creation of those, are you saying that they're a bad idea or by themselves they may not lead to the conjunction of other things. >> we have to be careful. it's vertical integration, so you get hospitals and doctors working together which is good on a lot of dimensions but if they tie up, then it makes the movement -- the potential movement of patients more difficult. in the first couple of years you may get savings because everyone wants to show that it works, but as time goes up, aco has locked up doctors and hospital groups and come to the purchaser and say it's too hard to save that much money year after year. we've done the easy stuff and that's all we're going to do or we're going to keep trying, but in

the meantime we need to recoop our money or raise the prices. and it may be too difficult to shift. the federal government is contracting with defense contracts and contract to keep it competitive so we need to think about that. health insurance markets. we've been talking about provider markets, my data is on hospital, but it goes to market hospitals. there's evolving changes in the health insurance market which will increase the need for better information for consumers and so consumers, in order to be affective purchasers of health insurance, they're going to need much better data from providers and health plans. i'm going to spend a couple of minutes talking about that. this slide

is busy. one thing. >> it is. >> fortunately the color coding will help out a lot, so this is a data taking from ehealthinsurance.com that's available in 2014. they got it rated as the best sellers and what you can see in this slide is it lists all the terms of the contract for the subscriber and it list the services that's covered and what the subscriber and the red part is the services which the provider has an out of cost expense where they say pay some percentage of the price and most of the table is red. that's very difficult from several years ago. >> can i ask you something. i

assume they don't color code it like this. >> they don't. i'm trying to make it more transparent for you. >> you got to start some where, right. >> right. so what this means is there's a tremendous demand on the part of consumers. here's a simple example. we were talking earlier, spraining my ankle and going to the ankle room, i think you have to pay $300 up front and 20 percent x-ray, so you have a broken ankle, i'm not sure and i think, i got to pay 20 percent. what is it going to cost me? what is the doctor going to say? i don't know. so in order for consumers to be informed rationale consumers, they need information. this is going to be -- this is a big switch. basically we need to switch our health care delivery system to a retail system. it

has been largely a wholesale system where blue cross buys and does most of the paying. now we're asking the individual consumer to get much more involved at a very micro level and the system has not been set up to provide this information. >> can i ask you aside from and i think kaiser is different, but in models like this, are you seeing this trend, the red shading across all plans? >> good question. i actually printed out 20 of these and gave it to my class and analyzed them. all of them had a cost like this. it's the individual market and not the employed market but if you had to guess, i'm going to guess that this model is going to creep into the employer market and so we're going to see within a couple of years a lot of red lines on coverage for employees provided by their employer. there's a reason for

this. this lowers premium. all these red things lower premiums because people useless services when they have to pay. the red expertment shows that. if the user is paying the health plan doesn't have to. we're going to see more of these in employer based plans because the employer based plans are paying for those rising prices that i showed you earlier and that really is the elephant in the room. the under lined prices in health care are going up and insurance plans are are this to collect the money and pay it back out. >> to somewhat summarize what we're saying, it's health care prices and it's the insurance provider -- it's a reallocation of cost. they have to make sure premiums -- maybe they're creeping up and the only way to

do that is shift actual cost when you do utilize services back to the retail. does that sound right? >> that's right. in the old days they negotiate hard are with hospitals and doctors to keep premiums down, and now that options has been for closed because of the lost of competition. a summary, we're going to need -- providers have a mass of this market power and they're going to exploit it and build on it unless we rewrite the rules and restore some of the price competition. consumer directed health plans which is these plans where consumers pay more out of pocket are here to stay. that's going to imply a lot more information from providers. what are the prices for this service, that service so the consumers can evaluate

what they're buying? and also information from health plans. a little more detail on that, so from providers, they're going to need detailed pricing, data from providers, but quality services things like that. what am i getting for this expenditure. doctor, how often when you take an x-ray, how often do you find a sprain so you can examine this purchase. we don't have that. for health plans, we need more information. one the things is right now you go to many health plan websites and you see that list of services and then what the premium is, but there's a big piece missing which is what is my expected out the pocket cost. we need better tools and better information from health plans about what the expected

cost will be. also we need information on availability. if i join this plan, who are the doctors that will take me on. you can't go to a website and easily find a list of doctors in your neighborhood who will take you on. all right. they have the data to do all of this easily. i think we need to really mandate minimum disclosure laws. the market will provide it too slowly to help us. i think that's it. thank you very much. >> okay. thank you professor. >> it's one thing, professors, i love to ask you as -- if you ever do this through your course work or what have you, the break down of the rising costs between cost of living wages, and all those other things, i think that would be helpful. i don't know if you have that or work on it during

class. >> it has been done and i'll done and i'll send it to your team. >> next we'll have suzanne from executive payment reform. thank you for being here. >> thank you chairman farrel and member wiener. it's wonderful to be here and i'm here to tell you that employers and employees need transparency in health care. i'm the executive director for catalyst payment reform. i'm suzanne and i was the founder of the leap frog. it's an issue i have been working on for more than 13 years. catalyst reform are for those who want better health care system. cpr has 31 members and they include safe

way and cal perse and household names like dug chemical as well as seven other state agencies included med aid agencies from four states. the price transparency is a top priority because we can't imagine a high value of health care system without it. as you know employers and other health care purchasers as well as consume hes continue to face rising health care cost. employers have been asking their ben fishary to take on the cost. purchasers believe that pressure from consumers is an under utilizing lever in health care and we know that just putting out information for people isn't enough to change behavior, but consumers need information to make good decisions. consumers don't expect prices to vary. it could be buried as much as

$1,000 within one market and you saw that from the other speakers. health plans can implement the promising strategies without price transparency. something called reference pricing, it sets prices for a drug or service and requires health plan members to pay many amount above it. for example, cal purse that is a reference price for knee replacement at $30,000. if a patient seeks service accident that patient will have to pay the difference if they charge more. this approach enables purchasers to let providers know that their price variation isn't acceptable and it gives them a chance to approach consumers. there are efforts to promote

price transparency. they have out of pocket cost for drugs and of course you mentioned they released the charge information under informations. 34 states also requires some kind of reporting of hospital charges or reimbursement rate, but on our laws that lisa mentioned, we found two states had access to information in a meaningful manner for consumers and most of the laws fall far short of getting consumers the information that they need. there are many challenges that remakeup and some of them have mentioned. some health care providers prohibit health plans from shaying information about what they get paid. health planning are working and they're rare and they have holes in the information that consumers need. employers have to rely on the health plan even

if they feel another vendor might be better suitable. cps have been supporting its members to be a critical mass pushing providers to remove these barriers. we supply our members with with questions that they can ask health plan partners and model terms with their contract with the health plan. we facilitate meetings for them to discuss transparency. cpr outlined and set specification and how we think prices should be. one of the tools you can find offered by health plans or independent vendors is they don't do a great job of helping consumers. there might be quality information and price information, but it would take complicated out rhyme to see what the best choice is. the various stakeholders in the

industry that are prevy could work together. it's unlikely that it will lead to transparency. they may be a need for government to step in. the city and county of san francisco could facilitate price transparency in a variety of ways. the city and county could require that health plan maintain robust and quality tools. second it could ask its health plan partners to work toward eliminating gag clauses from providers in they prohibit the health plan from sharing information with their patients. it could require the health care provider report what claims and hospital claims dollars are running through

contracts that limit sharing pricing quality information with patient members. third, the city and county of san francisco in order to make sure it meets its few dishary process -- >> i'm waiting for my colleagues to come in from their air quality board, so we're going to take a five minute recess. >> okay. >> or else we're going to break form here. so we'll do that. if we can go into a five minute recess and we'll we'll pick up where we left off at.

welcome back everyone to the budget and financial committee meeting for wednesday the 6th. again, i appreciate everyone who is come being in attendance. thank you supervisor mar and mr. bonco. i'm sorry we had to interrupt

your presentation and thank you for being here and if you want to continue. >> sure. i'll go over the punch line again. i said what the city of san francisco can do. as a large purchaser, it could require that its contracted plans maintain robust price transparency tools for their patient members and can that they work toward eliminating the gag claws of providers so there's not holes to consumers about what different providers might cost in terms of their out of pocket liability. what i was about to say is the city of san francisco, in order to make sure it meets its fiduciary duties could have all contract plans could offer discloses. any third party vendor contracted by the city and county so analyze on make

information available to consumers. the city could consider building its own data base to design to produce robust information by its citizens. the only thought i have to add that people live or work in san francisco may seek care outside the city's boundaries or may live elsewhere and come into the city to work, the city could play a role in providing state wide of this kind. the city could work to insure that health care providers have information to health care information. research shows which is promising that if physician has access to that information they'll work in the best interest of their patient. one study showed when they had accessed the information of case such as diagnostic test, that they were ordering for patients. she ordered fewer of them. physicians are the gate keeper of our health care spending and this is promising for the impact on quality as