Tuesday, March 10, 2015

Stop their expansion? Hell, shrink them.

Priyanka Dayal McCluskey's Boston Globe article reports on concerns by the MA Attorney General that the acquisition of a physicians group by Partners Healthcare System will raise costs in the eastern Massachusetts health care market.

Just five weeks after its plans to merge with a big suburban hospital were rebuffed, the state’s most powerful health system is moving to complete an acquisition of a smaller doctors group that will strengthen its foothold in the Eastern Massachusetts medical market.

The move by Partners HealthCare to take over Harbor Medical Associates, a practice of about 70 physicians on the South Shore, immediately drew fire from Attorney General Maura Healey.

Adding Harbor Medical to its physician network — already 6,000 strong — will allow Partners to raise the prices those doctors charge. The state Health Policy Commission, which tracks medical spending, has said Partners’ acquisition of Harbor Medical would permanently raise prices by more than 41 percent a year, adding $8 million to annual spending.

But that's not all it would do. The acquisition would also cement in the referrals of those doctors to PHS hospitals, which are also priced well above average. So not only would local MD visits become more expensive: Follow-up secondary and tertiary care would also.

The AG and the story miss out on a key element of this scenario, the compliance of the major insurer in the state, Blue Cross Blue Shield of MA.  Had not BCBS agreed to a contract term that allowed PHS to expand its base of physicians, those doctors would not have been able to have been offered higher rates in the first place.  They might then have chosen to become affiliated with another network or to have remained independent.  (Why do I only mention BCBS?  Because it is, by far, the dominant insurer in the state--with more subscribers than all the others combined--and the other small companies are forced to follow its lead on such issues.)  Why is there no investigation by the AG into BCBS contracting practices?

I wonder, too, why the AG and the newspaper do not expand on the implications of such statements as this.

"Harbor Medical’s chief executive, Dr. Peter A. Grape, and Brigham and Women’s Hospital’s president, Dr. Elizabeth G. Nabel, added in a joint statement that the deal will give South Shore patients better access to specialists at Brigham."

This is a prima facie admission of discrimination on the part of this Harvard teaching hospital:  You get better access to us only if you are referred by a PHS doctor.

And it is likely also an admission that the Epic EHR being installed by PHS also is being used in a discriminatory fashion:  You only get interoperability between your local doctor's and the hospital's electronic health record if both entities are part of the PHS system?

It's time for the AG to take PHS to task for continuing exploitation of its existing market power, to pursue anti-trust measures to shrink the system down, in addition to opposing its expansion.  It's time for the AG to insist on true interoperability of EHRs in the state--on which hundreds of millions of dollars in government-supported investments are being made--to allow full choice by patients and referring physicians.  It's time for the newspaper, too, to point out the inherent inconsistencies in the PHS statements and actions: Report on the existing use of market power, not only increments to it.  A good first step would be to check out that PHS billion dollar Epic EHR system and see how costly it will be for a non-PHS physician group or hospital to exchange patient medical records.


nonlocal MD said...

Man, they never give up, do they? Your government will be fighting them for decades. Call the feds for renewal of their antitrust investigation.

Anonymous said...

Paul - The other thing to point out is that within Partners there is clearly an agreement where Mass General controls Boston and service areas to the north and west while Brigham & Women's controls the service areas Boston and to the south. All along they should have been going after the PCP referral base at South Shore as that is what sends cases up to the Brigham specialists and fills up their hospital beds. They didn't get the whole South Shore entity so they came back for the PCPs which is actually a very smart move. Regardless, they are probably already getting all of this care just not at the Partners contractual rates. It sure seems like Partners and BCBS of MA continue to see each other as good for one another as they both dominate their respective lines of business and keep getting stronger by staying close. I think it will take the collapse of a NEMC or Steward to drive the point home to politicians where they finally decide to do something about Partners. Until then it will just be more of the same.

Anonymous said...

All of these insights are well taken. A few comments:

1) BCBSMA has enormous bargaining power with Partners, but they prefer to use that power on much smaller financially strapped players. They always negotiate with Partners first locking them in for several years. Then, with Partners secured in their network, they become very tough negotiators with all of the much smaller, weaker hospital and doctor groups. This eagerness to make concessions to Partners is not borne out of weakness; Blue Cross is is enormous and even Partners could not survive without a contract with them. If Blue Cross had the will, they could force much tougher bargains than they choose to. However, Partners is also their largest customer! Partners self-insured employee health plan is administered by BCBSMA. One has to wonder if this is the real reason that BCBSMA was the only major MA health plan that didn't oppose the Partners - SouthShore merger and why they make concessions to Partners they offer no other system (except perhaps CHIldren's which is another story). The cost of coddling their biggest customer should indeed be better understood by the fully insured employers (almost entirely small businesses).

2) The EMR issues you raise are huge. Currently, Partners EHR system lists only Partners facilities as referral selections in their systems. SO if you need an MRI and prefer to go to a much cheaper free-standing facility not associated with Partners, that is not a referral option that can be done with a click of the mouse. As you can imagine, this results in very high "domestic utilization" and very little leakage out of their system. EPIC is an electronic fence built around the Partners system that makes it very hard for consumers to be offered any option other than a Partners one--even if another option is a better value for the consumer or his employer.

3) It is interesting to note that in the 2013 data recently made public by CHIA, it seems that FOUR hospitals account for about 70% of all of BCBSMA's indemnity product payments in Massachusetts. Those four hospitals are MGH, BWH, DFCI and Children's. 62 hospitals in MA share the remaining 30% of the indemnity payments. An investigation of this peculiar revenue distribution to understand the drivers (gigantic pricing disparities?; membership distribution?) could be revealing and shed light on the possibility that this is just another way that Blue Cross quietly directs disproportionate resources to their largest customer thus enabling their continued market growth and domination.

Anonymous said...

God bless you Paul and anonymous! I will use this to see what can happen in my area. I've always wondered about BCBS in my state, and this would ring true with what I've seen and experienced regarding their "decisions".