A dramatic cease-fire was announced over the weekend. No, not the one in the Mideast, but rather in the health care market in Massachusetts. As documented in this Boston Globe story by Scott Allen and Jeff Krasner, Tufts Medical Center and Blue Cross Blue Shield of MA reached an agreement on a payment contract. What's the big deal? Well, Tufts had threatened to pull out of the BCBS network when it felt that it was not being offered sufficient compensation for its medical services.
The context was important. The Globe had previously reported that payments to Tufts and its doctors were substantially below those received by, in particular, the hospitals and doctors in the Partners Healthcare System, and often below those received by BIDMC and its doctors. As I have noted below, there is really no justification for these differentials, if one considers the actual quality of care delivered by the major academic medical centers.
Well, I guess Tufts felt that enough was enough and stood its ground in its contract negotiations with BCBS. This was a gutsy move, in that BCBS has more subscribers than all the other insurance companies combined, and Tufts and its doctors stood to lose a lot of business if the dispute was not resolved.
We should all be pleased that the issue was settled, apparently to the satisfaction of both parties. It is difficult to believe that Tufts could have followed this path absent the Boston Globe stories, in that those stories created the moral high ground for a different kind of negotiation. After all, there is no data to support the contention that a patient at MGH or Brigham and Women's Hospital will receive better care than at Tufts.
But where does that leave the state? On its face, the Tufts-BCBS deal seems to contradict the hopes of Governor Deval Patrick, who, it is reported, wants the hospitals and insurers to slow down the growth rate in health care premiums. BCBS, for its part, has been pursing adoption of a capitated insurance reimbursement approach to control those costs, and adoption of that plan was announced as part of the Tufts deal. But clearly some compromise must have been reached. The plan offered to Tufts had to be more generous than the one previously offered, or the deal would not have been done.
We have been discussing this alternative contract idea with BCBS for several months, too, and both parties are trying to figure out how it might be designed to work in the environment of our medical center and our physicians. One key issue is that such a plan transfers a portion of the insurance risk of health care to the providers and away from the insurance company. Some element of this risk-sharing is probably essential to align incentives between the providers and the insurer, but the specific design and implementation plan is important, lest the hospital and doctors find themselves with a major revenue loss at the end of any given year. After all, providers do not have the kind of financial reserves that insurance companies have.
Another important issue is that we do not control the delivery of the full spectrum of care, from primary care to hospitalization to skilled nursing facilities. A capitated contract requires some kind of relationship among providers across that spectrum, so that risk can be appropriately monitored and shared.
Nonetheless, people of good will can work through these issues, and I am hopeful that we can, too. In the meantime, as I have noted often on these pages, there are many steps that hospitals and doctors can take in the current fee-for-service reimbursement environment that also help to control cost increases. My passion for reducing harm that you have seen repeatedly on these pages is an important part of that process. See below, for example, the post about reducing ventilator associated pneumonia. That program not only saved lives: It saved millions of dollars in medical costs. That most of the savings went to the insurance companies did not preclude us from adopting this standard of care. Our job, simply, was to reduce harm and save lives.
As you can tell from my post below, I am frustrated that the medical profession in this city has not adopted an aggressive and transparent approach to this kind of quality improvement. As noted by one or more comments under that post, in its delays, the profession risks abdication on these matters to governmental authorities, who will impose standards that will inevitably lack the subtlety and effectiveness of those that the profession could otherwise design for itself.
Also, on these pages you have seen an emphasis on BIDMC Spirit, our process improvement program based on the Toyota production system. We engaged in this program to improve the work environment for our staff and to improve patient care, but it also has the effect of controlling costs and improving efficiency. Again, a great portion of the cost savings will flow through to the insurance companies, but we still pursue the effort because of its advantages to the organization. I want to acknowledge here that our progress on the front was greatly aided by technical support and assistance from BCBS, as part of a pilot program involving five hospitals in the state. The program gave us exposure to people and ideas and resources that we might have encountered otherwise, but that probably would have been delayed by several years.
As a result of these joint efforts with BCBS and with other helpful people like the Institute for Healthcare Improvement, we find ourselves to be in the vanguard with others around the country in the implementation of these approaches. Through this blog and other presentations, we are doing our best to share what we have learned. As I have often stressed, quality and process improvement and transparency is not a matter of gaining competitive advantage.
As long as the distribution of health care reimbursement revenues is viewed as a zero sum game, the likelihood of cooperation across the hospital and medical community is likely to be minimal. If Tufts Medical Center got more, must everyone else get less? No. My hope is that the presentations here and elsewhere of what we and others have learned will help people understand that it is not a zero sum game. Society as a whole can benefit from the kinds of quality and safety and other process improvements with which we have been experimenting. But we need all participants to shed their defensiveness and fear of disclosure, to acknowledge the areas needing improvement, and to share what they have learned for the greater good.