Thursday, September 19, 2013

Different facts. Same issue.

Julie Donnelly at the Boston Business Journal graciously offers a mea culpa for a factual error in her recent column.  Recall that the thrust of the column was that Partners Healthcare System was only making its primary care doctors available to subsidized insurance products at its affiliated Neighborhood Health Plan.  She now corrects this:

It is the insurers, and not Partners HealthCare, that are limiting access to doctors at Massachusetts General Hospital and Brigham and Women’s Hospital. The reason is simple: the doctors are too expensive for most of the plans that are set to offer ObamaCare plans on the Health Connector.

Brava to Julie for admitting the error, but also brava for pointing out that an underlying problem exists: The excessive rates charged by PHS for its physicians.

In my commentary on the situation as Julie first described it, I wondered how the kind of self-dealing indicated by her story could take place.  I also wondered what state agency would have jurisdiction over such matters.

The same issue remains.  Let's think it through.  How is it possible that NHP can afford to include the PHS doctors in its Obamacare subsidized health plan, but other insurers cannot?  There are two possibilities.  One is that PHS has offered those doctors to NHP at a discount, a discount that is not being offered to other insurers.

The other possibility is that NHP is taking a loss on these plans, covered by the huge resources available to PHS generally.  This would permit NHP to gain market share relative to other insurers, in essence subsidized by the excessive rates paid by all insurers to PHS.

In either case, we again have the self-dealing issue, just in another form.

So, Julie, your mea culpa is thoughtful, and I predict that you will not let up on the importance of the underlying issue of this system's market power and ability to transfer costs and revenues to suit its overall corporate purpose.


Barry Carol said...

Along the same lines, if Partners negotiates a global budget agreement with, say, Blue Cross and Blue Shield of MA that incorporates its above market prices per service, test or procedure, it would expect its referring doctors to refer within the Partners system to the maximum extent possible. Then, to track the utilization and productivity of its in-house doctors, it could use an internal fee for service system that only “charged” the doctors the actual cost plus perhaps a small margin for each service while “charging” them what Partners actually pays to any provider outside of its system when its doctors refer patients there. It’s too clever by half in my opinion. Meanwhile, Partners continues to expand its regional footprint which exacerbates the problem.

Dennis Byron said...

There's a lot of moving parts here and not all of them (maybe none of them) are immoral or illegal as alleged or implied. Partners owning an insurance company just seems a throwback to the original HMO concept, at least as we experienced here in Mass at Harvard, Tufts and Fallon. Referring in their own network is the way all of the pseudo HMOs work today. In the end, it appears that the sole "crime" is that Partners is big.

So aren't there some analogies elsewhere to compare against. Is bigness even the problem? My understanding is that when Harvard, Tufts and Fallon started their HMOs, they were simply doing something that Kaiser and/or Mayo started elsewhere. Kaiser at least is still at it and in fact covers the whole western US, including CA. So presumably it is much bigger than Partners and its inhouse insurance company? Are its prices similarly out of whack in its geographies? Is it continuing to expand? Is it limiting its doctors to its insurance companies on the CA exchange? (The answer to that question is yes but this comment is getting too long.)

Anonymous said...

Paul - Part of the reason they are driving patients to these "low cost" providers is to keep these other hospital systems viable. Look at the "for profit" Steward system with all of its old, empty hospitals like Quincy Hospital and Carney Hospital. They can't survive without this patient base. The irony is that the Steward CEO Ralph De La Torre is listing his six million dollar house in Newton for sale which tells anyone that they are going to try and sell their system as quickly as possible once the lock up period ends this November (he claims he wants to live in Boston but then pulls the listing??). Further, you have the Patrick Administration announce grants yesterday that include $308,334 to Steward St. Elizabeth's for "outreach and enrollment.... whatever that is. So the state is now sending money to Cerberus and Steward to prop them up (of course the Mass HHS giving this money out is run by former St. Elizabeth's President John Polanowicz which raises eyebrows as well). My overall point is that they are trying to keep places open that probably are NOT needed. We need to close and consolidate some of these old hospitals that don't make sense anymore. The state is limiting choice and keeping the Partners system doctors out of these plans so they end up at these other networks. In the case of Steward, why are we using state money to prop up a private equity firm in New York City? Cerberus executives are probably a LOT richer than most of us... do they really need state welfare?

Anonymous said...

why do you say some hospitals are not needed?

You mention Carney and Quincy as hospitals that are empty and being propped up?

the reason these hospitals are not fully utilized is our perverse insurance system. It costs twice as much to treat a patient for routine care at places like MGH, Brigham & Womens and Childrens Boston versus a hospital like Carney or Quincy or other good community hospitals. Yet most of the community hospitals in Boston proper have closed and many of the ones near by are in trouble as well.

Massachusetts patients have had no incentive to go to the less expensive hospitals for routine care (until recently).

So they pay twice as much in Longwood or in the West End where MGH is located.

It is not that high quality inexpensive community hospitals are not needed. In Massachusetts super expensive academic medical centers are far too large and keep expanding. They suck in patients at twice the cost to all of us and especially tax payers

Making insurance networks that exclude these high cost institutions will help lower health cost and if the "well to do" patients want to pay out of pocket for the added "peace of mind" to go to the hospital with the most prestige they can do so.

But those of us who study these issues know that the best academic medical centers are "merely average" like most Massachusetts community hospitals when treating routine procedures. So no premium is desirable.

Anonymous said...

Good conversation here.

I have lived in Quincy for 35 years. I choose to have my care at both Milton hospital and Mass General. Milton for convenience/service and MGH for quality. While I can appreciate what Steward is attempting to do... What is that saying, you can put lipstick on a pig, but it's still a... Anyhow, this is my opinion based on personal experiences. It would be nice if Quincy could offer the MGH quality and Milton customer service. Maybe someday.