Saturday, March 12, 2016

Meanwhile, back in Massachusetts

It's been some time since I commented on issues of market dominance in Massachusetts, but a recent story by Bruce Mohl at Commonwealth Magazine caught my interest. He writes about a petition being supported by a health care union, SEIU, and Steward Health Care that would mandate a flattening of rate disparities among the state's hospitals.

The Massachusetts Hospital Association opposes the ballot question.  Mohl notes:

All but one of the hospital association’s board members head institutions that would benefit financially from the ballot question, but nevertheless they have formed a united front against it. Their reasons vary. Some are wary of government price regulation; others don’t think a ballot question is the best way to set health care policy. Whatever their motivation, the united front benefits Partners HealthCare, the one association member who would take a big hit if the ballot question becomes law.

Mohl notes that under the proposed legislation:

Lowell General Hospital would receive $27 million. Cambridge Health Alliance would get $22 million. CareGroup, which owns Beth Israel Deaconess and Mount Auburn Hospital, would pick up a total of $17 million. Baystate Health and Lahey Health would each receive $10 million, New England Baptist would get $7 million, Boston Medical Center would recover nearly $4 million, and Tufts Medical Center nearly $3 million.

He also reports:

A source familiar with the board’s discussions said Partners wields enormous power within the association, since it supplies 20 to 25 percent of its revenue. The source said the hospital association has pledged $14 million to the ballot question fight, with $12 million coming from Partners and $2 million from the association’s other members. The Rasky Baerlein firm is being enlisted to run the ballot campaign, the source said.
What more evidence do you need of the power and intimidation that Partners can wield among the insiders of the Boston health care market?

Some in the MHA find inimical the prospect of regulation of hospital pricing by the state.  Oddly, some of those very people are among the first to complain that the market-power-based rate-making system current employed by Blue Cross Blue Shield and the other insurers is unjust. Now, when they could act, they adopt an ostrich-like pose.  Do they really think that "a hospital association subcommittee headed by Michael Widmer, the former head of the Massachusetts Taxpayers Foundation" will find ways to address the pricing differentials?  Over the course of the last decade, two Attorneys General have documented the disparities problem and its untoward effect on overall health care costs in the state, and the MHA has failed to do anything about it.

Meanwhile, Steward's support for the petition is humorous.  That system has always bragged about being a "low-cost" alternative to the pricey academic medical centers.  It now seems to realize that it is not really "low-cost" but simply "low-paid."  Meanwhile, for years it sent its tertiary referrals to Partners' Massachusetts General Hospital, the highest paid tertiary center--a move that undercut the profitability of the global payment based system Steward has chosen to sign with insurers.

In short, everybody seems to want to have it both ways.  Except Partners.  Which has is (again) their way.  Bravo, Partners!  Well done.


Anonymous said...

(sic) it

Anonymous said...

Steward appears to be getting a bit desperate having their SEIU union friends push this ballot question that benefits them financially. They just sold land at their St. Elizabeth's campus in Brighton for $21 million and they claim this money will be used to pay down some of their $413 million in network debt. That is a lot of debt to carry on a small community hospital system and I wonder what is driving this high debt level? There is also very little transparency on how their parent company Cerberus Capital Management is making any money from owning Steward.... those type of hedge funds generally command a significant return on their money for their investors. When Steward sold all of their medical office buildings for $100 million a few years back they said that money would be used to improve their hospitals but I don't know if that claim has ever been verified either. Steward was really the first "for profit" network in Massachusetts and at least for now it looks like they have built up high debt levels and sought out significant asset sales worth well over $150 million dollars in cash that was supposed to stay in the system or pay down debt. Again, how is the parent company making any profit on all of these dealings?