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 be here. we're here to today to lend our support and to affirm our commitment to quality transparency and to price transparency. i am -- i'm the manager here in san francisco for kaiser foundation hospital and health plan and i'm accountable for the care delivered to a little of over $192,000 people. 3,000 healthy san francisco 192,000 people. 3,000 healthy san francisco

healthy participant and $3,000 health members and for kaiser california we serve 55,000 city and county employees and a little over 2,000 in san francisco. we value our partner and our relationship with the city and county. and we look forward to collaborating on this effort. for many years, kaiser has been involved in sharing successful clinical practices, quality transparency. we know that by doing that, we get the best clinical outcomes for our patients. for example, if you're a kaiser member in northern california, you have a 30 percent lower risk of dying from heart disease as compared to someone who is not. we have outcomes like that and we know that's not enough. we know we

have more work to do. we also acknowledge that while we've been the lowest priced health plan for the city and county since 2008, we know that doesn't necessarily mean affordable to people. we know we have to do better and so i want to reaffirm our commitment to tell you that we will continue to collaborate. we support the principals of quality transparency as well as price transparency and i've asked my colleague, our senior vice president for sales and account management in california, peter andraty to talk about this issue of transparency. >> thanks. hello supervisors and good to see you again. i'm sure you'll have questions

later. i work with lisa and the hsf staff on our contract and how we deliver services here and i'm responsible for working with 8,000 large groups in california including public sector accounts and 80,000 small businesses so i work with the group market. we at kaiser agree that the rising cost of health care is a challenge to you, it's a challenge to the citizens here in this city and it's the biggest challenge we face in america and in fact costs and affordability is really what triggered health care reform. that was the issue. both insurance carriers and health care providers need to pick up this challenge and be sure that people like you that pay the bills, people like you guys who pay the bills, you can afford the insurance and it has to be high quality. i'm

going to talk about how it has to be cost and quality. our purpose is provide the highest quality care that's affordable and insure the community. chris spends a lot of time, our organization spends a lot of time in the community. it's around the community health and population health management and not just our members. we want to improve the health of the community. you have to told me that we have high quality and so you've said, i've got it. you have high quality. it's the cost. it's almost back to bill clinton, the economy is stupid. it's the cost. we hear you. our whole company hears you. our new ceo made public statements that health -- health care insurance is unaffordable. and

we have physicians that are doing things everyday to drive down the cost of health insurance and health care while improving quality. we're also encouraged that there's a number of studies out there and you know them already. there's accounting and consulting firm that says kaiser is the most sufficient health care in california. that's not good enough. it doesn't mean we're affordable but it says we're more efficient than the others. we're deeply committed and i was with lisa today for over an hour, so i want to reemphasize that we're committed to the city and county and your employees and your union to give you the best value for your health care dollar and we intend to lead the way to make things better regarding both the cost and the transparency. so it's a little strange. we talked about transparency. i go throughout the state and talk to customers and transparency means a lot to a lot of different people. it can mean unit costs, it can

mean quality. it can mean inappropriate care which we hear. it could mean your margins. it could mean why does your ceo makes so much money. we actually believe it is about access to data and cost and the prices that's being charged vment --. we heard about that. we believe that groups like you and the average first on should have better data to them. we believe that sharing data on quality cost and sufficient -- you can hold doctors and hospitals accountable for what they're doing. we believe the industry needs to focus on prevention and outcomes and

create new metrics that measure quality and cost. it's cost, quality, outcomes and access. we don't have a lot up here, but you go down to south california and they have these narrow networks, we need to look at the qualities of those, who is in and out and access how long did it take to see a specialist. that's not the on plan list. it doesn't say that you have to wait six weeks to see a specialist. i'm trying to give you advice, access is a big deal. >> can i ask a question. >> sure. >> in talking with all the insurance providers and our health service members and the union members, an easy thing to grab on is what is the data set we want. we talk about utilization as a big thing. quality, that's a gray area and i wonder in your experience, do

people even begin to -- i think even on the same field in terms of agree to what quality or how to measure quality? >> we would love to work with the staff and you. i think there's lots of well known quality metric out there. leap frog, we heard. what is disappointing of it is the average consumer doesn't seem to care so what can we do together to take and key this metric and turn that into something that the average group and the average person can understand and then say here's the quality scores, here's the cost and what's the best value accident so we would love to work with you and translating that into something simple. >> great. >> a couple of more remarks and i'll go on. >> we have tough times in this room or at least i've had tough

times in this room a few months ago, so i appreciate that we're here and we're enthusiastic about working with lisa and the hsf staff and the entire board on our next renewal and on transparency and data reporting. ultimately this comes down to how can we make health care for affordable. there isn't one simple example. we're looking at care transformation which is changing how we deliver care and we're looking to be more efficient and we're looking at the cost of things we get. so we have to buy drugs and contract with ambulances so we're try to go do that as best as possible because those costs get passed onto you of course. we recognize you want to look at your data for the same reason we want to look at the data. we have the same vision

and goals, better care, better health and lower cost. thank you and i'll entertain all questions including about the integrated care management fee. >> supervisor mar. >> thank you for your work with the health service board and the system staff, but coming to the board of supervisors and explaining how we're moving forward with transparency and the acknowledgement that our community needs. i love that thrive. it's prominent throughout the city and the tremendous support to the community based programs is really valuable to me. i'm touring the french campus. i think it's on friday which is in my district and i appreciate this transparency as we move forward. >> i was born at that hospital too. any other