Issue link: https://beckershealthcare.uberflip.com/i/759108
24 CFO / FINANCE Parents Charged $39 to Hold Baby After Birth, Itemized Bill Shows By Brooke Murphy U tah father Ryan Grassley posted a photo of a hos- pital bill on Reddit showing a $39.95 charge that he characterized as a fee "to hold my baby after he was born." The itemized bill for the delivery of a baby by caesarean section on Sept. 4 contains a $39.95 charge for an item list- ed as "skin to skin after C-sec." Mr. Grassley initially redact- ed any information identifying the hospital, but has since told The New York Times their child was born at Utah Valley Hospital in Provo. Mr. Grassley clarified he and his wife were amused, rath- er than outraged, over the charge. But the Reddit post published Monday touched a nerve nationally because it seemed to underscore a growing frustration with un- expected hospital fees and arcane medical billing. The post garnered more than 11,800 upvotes, or likes, as of Wednesday. "The nurse let me hold the baby on my wife's neck/chest. Even borrowed my camera to take a few pictures of us," the user wrote. "Everyone involved in [delivery] process was great, and we had a positive experience. We just got a chuckle out of seeing [the charge] on the bill." Utah Valley Hospital issued a statement in response to the post, explaining the skin-to-skin contact in the operating room following a C-section requires the presence of an ad- ditional nurse for supervision. "Only in the case of a C-section birth is an additional nurse brought into the operating room. This is to ensure both mom and baby remain safe, as the mother has been med- icated for the procedure," a hospital spokesperson said in the statement. "I [have since] sent an email to the hospital and the subject line said, 'I think I may have ruined your day,'" Mr. Grassley said, noting he has no plans to contest the fee. n What This Year's Nobel Memorial Prize in Economics Means for ACOs, Physician Compensation By Emily Rappleye T wo economists were awarded the 2016 Nobel Memorial Prize in Economic Sciences for their work in contract theory — work that could inform physi- cian-hospital, compensation and value-based care agreements. e economists, Oliver Hart, PhD, a profes- sor at Harvard, and Bengt Holmström, PhD, a professor at MIT, help explain how to bet- ter design contracts to improve output and align incentives. e awarding body, Royal Swedish Academy of Sciences, notes that contract theory cannot provide definitive answers, but can help provide structure and evaluate contract effectiveness. For example, under pay-for-performance agreements, physicians are usually paid an incentive-based bonus on top of fee-for-ser- vice compensation. ese payments are based on agreed-upon measures of quality and cost. Dr. Holmström's work suggests payment un- der this type of structure should be tied to the broadest possible measure of performance. He argues that a manager's pay should not de- pend entirely on his or her firm's share price because this could reward the manager for good or bad luck if an industry is up or down. Instead, pay should be linked to the firm's share price relative to the overall industry performance, according to Dr. Holmström. His work also demonstrates performance that is difficult to measure should be compensat- ed with a more fixed structure. Likewise, pay should be more fixed if a person is responsi- ble for a variety of tasks. For example, phy- sicians could begin to focus too closely on improving specific measures while neglecting others to improve compensation. ey would be "teaching to the test," according to Dr. Hol- mström's work. ese principles also play out in ACOs, where teamwork can lead to free-riding. Under an ACO's framework, more patients and physi- cians are needed to ensure quality metrics are precise, hence Medicare's minimum require- ment for ACOs to have 5,000 beneficiaries. However, this also means individual physi- cian behavior has less influence on the group's overall quality performance, leading to the possibility of free-riding, or those who shirk responsibilities and benefit from the efforts of others. Dr. Holmström suggests employ- ing an outside owner or deferring portions of compensation can help mitigate this problem. Dr. Hart's work can help inform physi- cian-hospital contracts. It focuses on incom- plete contracts, or those that face unforeseen challenges that may not be anticipated when drawing up the agreement. Because future events are unknown, Dr. Hart posits that contracts should instead outline who has the right to make the decision if both entities do not agree. When contracting is complex and many outcomes are unforeseen and there- fore cannot be measured and benchmarked, Dr. Hart suggests using decision allocation rights instead. He also provides theory to guide ownership decisions and financial contracts. Dr. Hart suggests some contracts, particularly those that require entrepreneurship or innovation, give the manager or entrepreneur the right to make decisions for the business if perfor- mance is positive, but allow investors to step in if performance lags. e work of Drs. Hart and Holmström pro- vides healthcare organizations the tools to analyze the financial terms of contracts as well as how control and decision rights are allocated between physicians, hospitals and other stakeholders. n