Sunday, January 25, 2009
I write this post with a bit of temerity that it will prompt all kinds of defensive reactions, but I am not doing it to criticize the protagonists -- rather to give an example of the kinds of market forces at work here in eastern Massachusetts. I am actually not sure as to whether the moral of the story is "That's life. Get used to it" or "This is an unsustainable situation." I let you be the judge and offer comments.
For the last several months, I have been hearing from friends at Norwood Hospital, a small community hospital south of Boston affiliated with the Caritas Christi system, that they were really afraid of a new ambulatory care center being built nearby by Partners Healthcare System for their flagship hospitals, MGH and Brigham and Women's. I frankly attributed the concerns to the usual kind of overstated fears you often get in this business, and so I discounted them.
Then, this past Friday, I was in Foxboro at Gillette Stadium to give a speech to a group of hospital finance people, and I was stunned to see a very large building (pictured above) adjacent to the stadium. I later checked it out and learned that the new center is 75,000 square feet and will offer the following specialties: Primary Care, General Surgery, Plastic Surgery, Orthopaedic Surgery, Cardiology, Cardiac Diagnostics, Dermatology, Diagnostic Imaging, Women’s Health, Rheumatology, Rehabilitation Services including Cardiac Rehab, Physiatry and Pain Management.
I now understood why my colleagues at little Norwood Hospital were nervous. Their website says they offer the following services, among others: Surgery, Obstetrics, Cardiology, Dermatology, Radiology, Neurology, Orthopaedics, Gastroenterology, Cancer Care, and Pediatrics. Not a complete overlap, but quite a bit.
As you can see on the MapQuest graphic, the two facilities are merely 8.5 miles apart, making them indistinguishable to many patients in terms of transportation access. Since insurance companies pay community doctors in the Partners system substantially more than those in the Caritas Christi system, it will be easier to recruit physicians to offer services in Foxboro than in Norwood. Does this difference in reimbursement rates reflect a documented difference in the quality of care between the community-based doctors in the two systems? No.
Now, let's acknowledge that MGH and the Brigham are powerful brands. To the extent patients are influenced by that reputation or other factors to migrate to the PHS facility from Norwood Hospital, the overall health care bill for the state will rise for no documented additional value to those patients or society.
The Boston Globe recently reported about similar expansions by PHS to the west and north of Boston. As I have said before, I offer no criticism about the business accomplishments of any hospital system. But when a differential in reimbursement rates that has no basis in quality or outcomes creates a market opportunity for one system vis-a-vis all the others, the effect is simply to raise overall costs to society.
Posted by Paul Levy at 1/25/2009 08:32:00 PM