AmSurg's CEO urges transparency in health costs

WASHINGTON — Let's say you want to buy a television. You find the model you like at one store for nearly $500, but at another store the same model is less than $200.
Basic economic theory says you choose the cheaper TV. If enough people do that, the store charging more lowers its prices.

That basic idea — transparency in pricing and quality benefits consumers and drives down prices — should be applied to the health-care industry, the CEO of a Nashville company testified last week.

Christopher Holden, president and CEO of AmSurg, which has 203 ambulatory surgery centers in 33 states, testified at a House hearing last week about legislation to require health-care providers to disclose what they charge for products and procedures.

Holden told members of the House Energy and Commerce Subcommittee on Health that if half the Medicare patients who sought surgical services at a hospital last year had instead gone to an outpatient surgery center, Medi care would have saved $2 billion.

The average cost of cataract surgery is $495.96 at a hospital and $192.49 at a surgical center, he said. Other average price differences he cited include $76.05 for a colonoscopy at a surgery center versus $186.06 at a hospital, and $209.92 for a knee arthroscopy in a center versus $403.36 at a hospital.

"There is very little information available to patients about the relative price of services offered by different types of providers in their community," Holden said.

It's a little more complicated

Rep. Frank Pallone, D-N.J., subcommittee chairman, said he supports the legislation but cautioned that the complexities of the health-care system make the benefits of transparency less clear. "Purchasing health care is not like going out and buying a car," he said.

People with health emergencies aren't likely to have the time or inclination to price-shop, Pallone said, and patients are often unwilling to go against the recommendation of their family physician.

Forty-one states already have some sort of disclosure requirements, said Steven Summer, CEO of the Colorado Hospital Association, who testified on behalf of the American Hospital Association.

The Tennessee Hospital Association provides information about the costs of procedures at hospitals through its Tennessee Hospitals Inform website at http://tnhospitalsinform.com.

The only witness to oppose the legislation was attorney Michael Cowie, formerly with the Federal Trade Commission. He said requiring large providers, such as drugmakers, to disclose negotiations with wholesalers or other intermediaries could lead to collusion and price-fixing.

But all subcommittee members of both parties expressed support for increasing available information on pricing and quality of care.

"You can find better reviews about a blender than a bypass," said Rep. Michael Burgess, R-Texas.

Contact Bill Theobald at wtheobal@gannett.com.

Top 10 Home Buying Mistakes

Health reform means big changes for businesses

Hard Times for HOAs Could Mean Fewer Home Sales Due to Delinquent Fees

Bills ignore ratings agencies

WASHINGTON — Although credit-rating agencies played a crucial role in creating the nation's severe financial crisis, the legislation to revamp financial regulation that Congress is considering would give them a dangerous pass.
Neither the Senate Banking Committee bill that's being debated now nor the version that the House of Representatives passed last year would require credit-rating agencies to do any due diligence when they rate complex financial instruments.

It was the failure to verify the soundness of underlying loans that led to the global financial meltdown; complex mortgage-backed bonds with investment-grade ratings were sold worldwide, but later proved to be junk.

A McClatchy Newspapers investigation in October exposed how Moody's sacrificed the quality of its ratings in order to preserve a lucrative market share even as it knew of brewing problems in the housing market and what that might mean to the broader financial system.

Ratings agencies grade bonds on their risks of default. Until the September 2008 near-collapse of financial markets, their word was gold. However, the three leading agencies — Moody's Investors Service, Standard & Poor's and Fitch Ratings — downgraded to junk status billions of dollars' worth of mortgage-backed bonds that they'd given top ratings to earlier.

Beginning in 2007, those downgrades set a chain of events in motion that resulted in a freezing of global credit markets, the rescue and sale of investment giant Bear Stearns, the failure of investment bank Lehman Brothers and the $180 billion-plus taxpayer bailout of insurance titan American International Group. The financial crisis snowballed into an economic recession, and more than 8 million Americans have lost their jobs.

At the leading edge of this devastating chain of events was a collapse in underwriting standards. People who had previously been deemed not creditworthy received mortgages; for slightly higher interest rates, lenders didn't even verify borrowers' incomes or employment.

(2 of 2)

Top 10 Home Buying Mistakes

Freddie Mac seeks additional $10.6 billion in aid

Understanding Credit Scores and Reports

Bull market set CEOs on track for big paydays

NEW YORK — America's top CEOs are set for a once-in-a-lifetime pay bonanza.
Most of them got their annual stock compensation early last year when the stock market was at a 12-year low. And companies doled out more stock and options than usual because grants from the previous year had fallen so much in value that many people thought they would never be worth anything.

But stock prices have generally surged ever since. Even with last week's sharp declines, CEOs still have enormous gains on paper.

"The dirty secret of 2009 is that CEOs were sitting on more wealth by the end of the year than they had accumulated in a long time," says David Wise, who advises boards on executive compensation for the Hay Group, a management consulting firm.

An Associated Press analysis of companies in the Standard & Poor's 500 index shows that 85 percent of the stock options given to CEOs last year are now worth more than they were on the day they were granted. For some the value jumped by a factor of 10 or more. A year ago, after the stock market had collapsed, 90 percent of the options granted in 2008 were worth less than the original estimate, or were considered "underwater," according to the AP's analysis.

Ford Motor Co. CEO Alan Mulally's pay package illustrates this point. In March 2009, Ford granted
5 million stock options to Mulally. Using a complex formula, Ford assigned the options an estimated value of $5 million. At the time, Ford's shares were trading at $1.96. Since then, the stock has jumped nearly sixfold, and Mulally's options have a value on paper of about $48 million.

Mulally is also ahead on his 2008 options, which were valued at $9 million when they were granted two years ago. Now, they're worth close to $21 million.

Mulally's gains still exist only on paper, of course. The ultimate size of his payday will fall if Ford's stock falters. But his gains could just as easily march even higher if Ford's stock continues to rise. And they take the sting out of a 30 percent salary cut and the lack of a bonus.

(2 of 2)

Mortgage Rates Ease a Bit This Week

Real Estate Outlook: Positive Track

Aspire to “Thrival” to Capitalize on Any Market Conditions

Dow builds on its gains

Gaylord Opryland: 24 hours of destruction

• 10:32 a.m.: At his Oak Hill home, Gaylord CEO and Chairman Colin Reed gets an e-mail from his head of security. The Cumberland River is rising, but it's projected to crest 3 feet below levees protecting the hotel. Rain should stop by mid-afternoon; everything seems fine.
It's the first of five e-mails Reed will receive within an eight-hour span updating river conditions. Each one shows a higher crest, but none shows floodwaters topping the levees.

• 6:32 p.m.: The final e-mail arrives. An official forecast shows the river will crest 2 feet below the top of the levee nearest Gaylord Opryland Resort & Convention Center.

• 6 p.m. to 7 p.m.: Reed sends two hotel executives to check the levee. They report back: Water is 12 inches from spilling over the top.

RelatedDespite forecasts, Opryland CEO evacuates guests just in time

• 7 p.m.: On a call with Reed, hotel Senior Vice President and General Manager Peter Weien recommends guests assemble in the Presidential Ballroom, the highest large space in the hotel. Water is 6 to 9 inches from the top of the levee.

• 8 p.m.: On a conference call with Reed and corporate executives, Weien recommends evacuation of 1,500 hotel guests and hundreds of employees. Reed decides to evacuate. "There was no hesitation," he says later. "I didn't want a replay of New Orleans after Katrina."

• 8:15 p.m.: Reed calls Steve Buchanan, president of the Grand Ole Opry division, and tells him to get out of the theater. Buchanan and others abandon a three-hour effort to move precious Opry memorabilia and tapes to safety. Still, much is saved.

• 9 p.m.: Corporate executives trickle into headquarters, about 2 miles from the hotel. Reed asks Weien to rescue country great Roy Acuff's gun collection from the hotel.

• 9:30 p.m.: Hotel evacuation wraps up; before locking the place down, security double-checks each guest room; they find one woman asleep in her bed oblivious to the commotion. Another guest is discovered hiding in a closet hoping to avoid evacuation.

• 10 p.m.: Reed goes to McGavock High School, where guests are sheltered. Senior executives bring the evacuees pillows and water. Pizza and doughnuts come later.

• 11 p.m.: Gaylord security spots small amounts of floodwater breaching the levee.

• Midnight: The Cumberland cascades over the levee, heading toward Gaylord Opryland.

MONDAY, MAY 3

• 1 a.m.: Floodwaters reach the front of the hotel.

• 3 a.m.: Parts of the hotel have taken on 4 to 6 feet of water.

• 5 a.m.: Reed gazes at the rain-swollen Cumberland from huge bay windows in his headquarters office. "This could be a long time, and this could be very bad," he thinks.

• 10 a.m.: Water as deep as 10 feet fills parts of the hotel.

— BONNA JOHNSON

Gaylord deflates damage speculationHard Times for HOAs Could Mean Fewer Home Sales Due to Delinquent Fees

Markets sift trades for clues

NEW YORK — Regulators and Wall Street officials went through millions of trades one by one Friday and canceled thousands as they sought to explain a record plunge in the stock market, undo damage and keep it from happening again.
It wasn't clear how long the laborious process would take or if it would even solve the mystery behind Thursday's harrowing trading session that saw the Dow Jones industrial average fall hundreds of points and then recover, all in a matter of minutes. The chaotic slide — some stocks briefly fell to near zero — brought back memories of the darkest days of the financial crisis.

The Securities and Exchange Commission and the Commodity Futures Trading Commission were investigating but on the day after, there were more questions than answers:

• Did a single trader mistakenly punch in the wrong number of shares when making a sell order, maybe mistyping "billion" instead of "million" and setting off a market-wide panic that at one point pulled the Dow down almost 1,000 points?

• Did high-speed computerized trading systems that are supposed to make markets work smoothly go haywire, sending stocks into a nosedive?

• Most important to anyone with money in the stock market: Could it happen again?

Maybe the scariest part was that no one could unravel what happened. That left executives at the major stock exchanges pointing fingers at each other, and the public wondering if the hidden world of high-frequency, computerized trading that fed the panic posed a threat to their 401(k)s.

"It could be a while before they figure it out because they have to sift through everything trade by trade," said San Diego State University finance professor Dan Seiver, who has followed the markets for 52 years. "And humans are a lot slower than machines."

Market officials worked to cancel thousands of "clearly erroneous" trades made during the plunge.

New York Stock Exchange Euronext CEO Duncan Niederauer told CNBC that his exchange canceled 4,000 trades.

At Direct Edge, the third-largest U.S. exchange, employees worked through the night reviewing some of the 10 million trades made Thursday and found 2,000 that had to be canceled, said Chief Executive William O'Brien.

(2 of 3)

Aspire to “Thrival” to Capitalize on Any Market ConditionsMarket fail-safes’ validity in doubt

Small cars lead way to better mileage

A race among competing automakers to see who could produce the most horsepower under the hood has been called off amid a federal push for better gas mileage over high performance.
But it remains to be seen if consumers will flock to vehicles with less get-up-and-go, or the latest technology to save on fuel, if the price of the car gets too high.

Manufacturers face a deadline of 2016 to increase their fleets' corporate average fuel economy (called CAFE for short) to nearly 35 miles a gallon. That has launched a battalion of industry designers and engineers on a quest to come up with new ways to boost fuel efficiency in ways that won't turn off car buyers.

While the small car and the four-cylinder engine are going to play key roles, they're not going to solve the fuel-economy problem all by themselves, automakers and analysts say.

Automakers are ramping up production of hybrids, all-electric cars such as Nissan's Leaf, or trying to use lighter-weight materials, new tire compounds and other tricks to squeeze a few more miles out of a gallon of gas.

Here are some things consumers should watch for as General Motors, Nissan, Ford and other carmakers move toward 2016. For instance:

Smaller, more fuel-efficient vehicles are coming, and some of these, such as the Chevrolet Cruze and Ford Fiesta, will offer improved gas mileage with no compromises on interior space, said Jeremy Anwyl, chief executive officer of the consumer automotive website Edmunds.com.

"The Fiesta is not a stripped-down cheapo car," Anwyl said. "It's not the sort of car the person has to feel like they're sentenced to."

Advances such as direct fuel injection, variable valve timing, turbochargers and automatic transmissions with six or more forward gears can help give a four-cylinder engine the power of a V-6, or a V-6 the power of a V-8.

Also, there are more-efficient six- and eight-cylinder engines in production or under development, so vehicles that require more power such as pickups and large family haulers won't have to give up performance in the quest for mileage, said Charlie Klein, director of mass energy and aerodynamics engineering for General Motors in Detroit.

(2 of 3)

Americans’ love for U.S. cars risesReal Estate Outlook: Faster Recovery?

Gaylord deflates damage speculation

Over the next two weeks, Gaylord officials expect to have a damage estimate, long-term plan for their employees and a better sense of how long it will take to reopen the flooded Gaylord Opryland Resort & Convention Center.
Damages could be $50 million or $100 million, said Colin Reed, CEO and chairman of Gaylord Entertainment, but not anywhere near the $300 million to $400 million that has been speculated. The company has a $50 million flood insurance policy for the hotel.

"The most heartbreaking thing is you walk through the buildings and feel like the soul has been taken out of them," said David Kloeppel, Gaylord president and chief operating officer, during a news conference outside the hotel on Friday.

Reed said he has assured investors that the damage and repairs to get up and running won't drag into 2011. "We will be up and functioning by the end of the year," Reed said. Reopening could occur anywhere from August to November. For at least the next two weeks, however, the hotel company won't take reservations for any stays or conventions through the end of October.

RelatedIn Nashville, cost of flood is $1.5 billion and risingHeck or high water can't knock WSM off the airTourism officials fight to keep conventionsOpry Mills still closed; piranha escape reports falseGaylord’s stock takes a bounce higher this morning on Wall StreetAerial scenes of Nashville area floodingNashville landmarks floodedPost-flood cleanup beginsNashville Flood 2010Opryland Hotel flood damageComplete coverage of Nashville flooding

Here are some other key updates about the property:

• Of 4 million square feet of space in the hotel, about 800,000 square feet flooded, including 65,000 square feet of exhibit halls and loading areas; 41,000 square feet of carpeted meeting rooms; and 210,000 square feet in the hotel's garden-filled atriums.

• Only 117 guest rooms of nearly 2,900 in the vast resort got flooded, all in the property's Delta area.

• The resort's 4,000 employees will receive full pay and benefits for at least six weeks. "What we don't want is to see our folks migrate off and go to work elsewhere," Reed said. They could also be a part of some cleanup operations and other preparations to reopen.

• The WSM broadcast station was damaged and has temporarily relocated in a small studio in Brentwood. Two feet of water washed over the stage of the Grand Ole Opry, leaving a film of mud.

Contact Bonna Johnson at 615-726-5990 or bjohnson@tennessean.com.

Opryland crippled; tourism hurtCan You Feel the Optimism Shift in Builder Mentality?