Thursday, April 29, 2010

Does market power help patients?

Rob Weisman and Liz Kowalczyk report in today's Boston Globe that the US Justice Department is investigating possible antitrust violations against Partners Healthcare System, the dominant hospital and physician provider group in Massachusetts.

The letter, obtained by the Globe, said the probe sought to determine whether the practices violated the Sherman Antitrust Act, which bars companies from using their market power to limit trade or artificially raise prices.

Since the Attorney General has already reported that rates collected by PHS are clearly higher than most others in the market, I imagine the case will rise or fall on the following proposition: Is the market power of this system necessary to produce an integration of care that brings clinical advantages to the public served by it? You could test this the following way: If you look at the actual data, is the safety and quality of care offered by PHS significantly different (in a positive way) from other academic medical centers, community hospitals, and physician groups in the state?

Note that I include all three components of the provider network. If a Partners GI doctor in the suburbs doing colonoscopies secures higher rates than his non-Partners colleague down the street -- solely because of his affiliation -- can you document that his care is better? If a patient goes to Newton Wellesley Hospital or North Shore Hospital, where the hospital and the doctors are both paid more than other community hospitals, can you document that their care is better? Ditto, of course, for the care given at the academic centers downtown.

Put it another way. Does the absence of such data -- given the paucity of transparency about clinical outcomes -- create a prima facie case that there is no demonstrable clinical benefit from Partners' market power and its resultant higher prices? Perhaps the answer depends on who has the burden of proof in anti-trust cases. Does the government have to prove that there is no demonstrable clinical advantage, or does Partners have prove that there is?

7 comments:

Anonymous said...

These hospitals in power always trot out the same arguments: there's the "our patients are sicker" argument, now the "market power produces clinical integration which is good" argument,and then there is this argument from the dominant provider in my area:

"Inova, however, rejects the competitive model. Knox Singleton, its chief executive, has told me that competition in health care is badly overrated, that it leads to costly excess capacity and ruinous price competition that saps hospitals of the money they need to offer quality service and provide care to the uninsured."
See link for how Knox envisioned his hospital system should rule the area.
http://www.washingtonpost.com/wp-dyn/content/article/2009/01/29/AR2009012904086.html

It begins to remind one of the excuses we hear from our kids.

I agree: let the quality data speak. After all, this is the era of evidence-based medicine. And really - what other rational measurement is there?

nonlocal MD

Anonymous said...

So what exactly is "the market"? I'd venture to say that, based on CMS data, the outcomes in my organization in the midwest are better than they are in any of the Boston hospitals...but you get paid better. So are you ready to level this playing field across the country (we all compete for the same talent..)? Be careful what you wish for.

Paul Levy said...

You are exactly right. Boston hospital people often have a self-satisfied belief that they provide the best health care in the world. In fact, I have heard those exact words from high-ranking people in this city. As you recognize, there is no basis for that belief -- especially if people have been reluctant to publicly measure and post their organizations' performance.

At BIDMC, we have taken some early steps to improve our own performance and are quite transparent about progress, (e.g., with regard to eliminating harm to patients -- check www.bidmc.org), but we recognize how far we have to go. We relish the opportunity to learn from others how to do this better.

Anonymous said...

I am not sure the court will look into outcomes.

This is pure antitrust. Does the Partners market power in any way prevent other healthcare delivery organizations to "compete fairly" They will have to find a statistically significant smoking gun. After a few/tens of millions of dollars spent on statisticians, actuaries and economist I would bet YES.

I also wonder when corporate email trails will be requested.

76 Degrees in San Diego said...

OK, I'm "in"
-no
-no
-no
-no
-yes
-yes
-no

?how many did I get right?

Keith said...

There is a disconnect between any measure of quality and what charges healthcare systems are able to leverage. A hospitals location and reputation, whether it is deserved or not, determine its negotiating clout with commercial insurers. This hopefully will change under the new health care legislation which attempts to create accountable health care organizations who ultimately will be compensated on quality measures rather the number of procedures performed.

Anonymous said...

Can someone explain the analogous process for an insurer with a dominant market share? Do they have to demonstrate that it helps patients? Or are they simply exempted from antitrust measures and allowed to set payment rates at whatever they want?

Logically if providers aren't allowed to leverage their market share then insurers shouldn't be either.