Sunlight is a great disinfectant, and for six years now the SEC, the PCAOB, and FASB have been laboring to shine more light into the shady corners of financial reporting and compensation. Slowly, painfully, and at great cost, public companies have relinquished their view that accounting, corporate governance, and other business practices are essentially private matters, and have made their actions more transparent. The movement may even be contagious: in an actual bipartisan gesture, this past January the U.S. Senate voted unanimously to require disclosure of “earmarks,” allocations for politicians’ pet projects that often lie hidden in pieces of broader legislation.
As revelations about stock-options backdating accumulate, it’s clear that the move toward transparency still has a way to go. One area in dire need of more sunlight is health care.
For more than 30 years, employers and the federal government have spent an ever-increasing portion of their budgets on insurance premiums, in lockstep with soaring health-care costs. With its localized networks of largely private suppliers, the health-care sector has long withheld from its customers the most basic of information: Which doctors provide the best care? Which overcharge? Which hospitals provide good value?
Today, pressure to release such data is increasing. Consumer-driven health-care plans (see “Pin the Tail on the Doctor“)depend on ready access to such information. As companies increasingly turn to this option, demands for more and better cost and quality numbers are intensifying, which should benefit both employer and employee.
It’s been costly and hard won, but companies have learned a valuable lesson that they can share with the health-care sector: once you get used to it, sunlight isn’t so bad.