Tuesday, February 03, 2015

Six years later, time for another try

Back in 2009, I set forth an agenda for the then-incoming CEO of Partners Healthcare System, suggesting:

If there is any organization in the state that has the potential to demonstrate the potential for an integrated health care delivery system, it is PHS. But, it will come as no surprise to participants in that system that this has not yet happened. The long-standing rivalry between the two flagship hospitals has meant that rationalization of tertiary and quaternary clinical service between the Brigham and the MGH has often been deferred. Previous Partners CEOs have focused their efforts on integration of back-office and other business aspects of the system, leaving clinical integration essentially untouched. Gary will face an interesting and important choice as to how and if he will address this unachieved potential benefit to the region. If the Partners system first sets an internal example, it might then be possible to achieve a broader rationalization of care in cooperation with the other academic medical centers (BIDMC, Boston Medical Center, and Tufts). We all need to garner these economies to control costs in the over-served Boston marketplace.

Well that didn't happen.  Here we are six years later,  and the same themes remain.  Joan Vennochi at the Boston Globe notes:

Partners needs a new business plan, one that emphasizes its core mission to provide great medical care, instead of market dominance through mergers with other hospitals. And provable cost control is essential for what is now the most expensive health care network in Massachusetts. The future must be focused on better, not bigger.

Partners never merged hospital assets; instead, between the Brigham and the General, it created two giant, co-existing hospital systems which still compete with each other. A much-cited New York Times editorial, written when critics of the deal first came forward, suggested the state should never have signed onto the merger that created Partners in the first place. Today, knowledgeable observers believe neither hospital would be sad to cut the ties that bind them. Indeed, especially within Mass. General, there was extensive internal opposition to the merger deal with South Shore Hospital and the spending caps that were part of it.

Unraveling Partners seems unlikely. That means the next leader will have to figure out a way to get these two institutions on the same page when it comes to corporate mission.


Barry Carol said...

One piece of good news in healthcare is the long term secular trend toward less need for hospital inpatient care. In addition, more outpatient care seems to be gravitating toward ambulatory surgical centers and physician owned clinics where doctors can perform procedures like colonoscopies and endoscopies.

When I had my most recent colonoscopy last year at my local community hospital, I noticed that it was far less busy than in past years. I was told that many of the procedures that used to be done there have moved to independent doctor owned clinics where costs are lower and the doctors capture more of the income. Perhaps the state of MA can ease or even eliminate its CON laws to foster more competition.

Another piece of potential good news, at least in MA, is more conservative practice patterns than may exist elsewhere. I note that in the recent NYT article on cardiac procedures in Southern FL, MA compared very favorably to FL on the number of procedures performed relative to the size of the population. Sensible tort reform could help this trend along by reducing the need for defensive medicine.

So, even if B&W and MGH never get on the same page, maybe healthcare cost growth in MA could still decline as more and more care can be safely delivered away from PHS’ hospitals, especially its two academic medical centers.

Keith said...

It seems that many of these mergers are done only for the purpose of leveraging higher reimbursement from insurers with no intent to integrate clinical services. There seems to be no purpose in doing so other than to reduce costs of care and why on earth would the CEO want to encourage that! I have yet to see many health care systems that have any desire or political will to do so. There seem to be no cost constraints that would nudge Partners to move in this direction.

As long as we maintain our payment structure of FFS and allow geography and market clout to determine pricing, we will continue to see this type of inertia from these health care behemoths.

Paul Levy said...

Keith, your point about market power holds whether pricing is FFS or capitated or whatever.