Monday, September 30, 2013

Small favors

In this blog post, Boston Business Journal reporter Julie Donnelly passes along a comment by Partners Healthcare System made for the pending Health Policy Commission Cost Trend Hearings that "it does not expect its prices to rise faster than the rate of general inflation in the next several years."

Excuse me if I am unimpressed.  PHS rates have been above the market for at least fifteen years.  Its most recent rate increase from Blue Cross, the largest insurer in Massachusetts (twice as big as #2 and equal to all the others combined), exceeded the BC statewide average, even though the base on which that increase was applied was already substantially above the other tertiary hospitals, secondary hospitals, and physicians in the state.

It would only be newsworthy if PHS is not able to beat the overall rate of inflation with that kind of head start.

As another party to the hearings notes:

We are concerned . . . that the direction of the Commonwealth’s cost containment efforts could have the unintended effect of institutionalizing significant market disparities and dysfunction in place if we fail to focus on the need for correction of these disparities, and on the cost containment goal as an aggregate goal.

Returning, though, to the point of Julie's article: "But if the government keeps cutting reimbursements to . . . hospitals, it is hard to see how they can survive without shifting more of the burden onto commercial insurers and the employers who buy their health plans."

Almost. If government payers do not do their share, there are two possible results:  Private payers will have to make up the difference, or many of the other providers will suffer decapitalization and losses.  I'm guessing it will be more of the latter than the former.  In which case, PHS market dominance will grow.

The fragmented system of government oversight and regulation created by the Governor and legislature in their most recent legislation, Chapter 224 of the Acts of 2012, continues to serve the powerful.

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