Wednesday, August 05, 2015

SEIU goes to the ballot to change hospital rates

Somewhat new to the issue, the SEIU has decided that it is unfair for non-Partners hospitals to get paid less than those affiliated with Partners Healthcare System. Priyanka Dayal McKluskey reports in the Boston Globe that the union "is pushing a ballot initiative that would divert millions of dollars from Partners HealthCare to lower-paid competitors in an effort to boost community hospitals and preserve union jobs."

My readers know that I am sympathetic to the cause of equalizing insurance payments to the hospitals and physicians in the state.  Now, they are set mainly on the basis of market power, something contrary to the public good. Some of us have been talking about this issue for over a decade.

But why is the union more recently interested in the topic?

My hypothesis is that they finally realized that the stated business strategy of Steward Health Care System to be the low-cost provider competing with Partners just doesn't hold water.  Steward has shown no ability to attract patients from the bigger system. The only thing that "lower costs"--read "lower rates"--has gotten the system is lower revenues and poorer earnings.

Years ago, the Steward CEO got the support of the SEIU when the Caritas Christi system was to be sold to Cerberus. Remember this story?

To steer the deal through, he orchestrated an unlikely alliance of the Boston Archdiocese, Democratic elected officials, the Service Employees International Union (SEIU), and community organizers in some of the state’s poorest cities – all to support turning the struggling nonprofit hospital chain into a for-profit operation owned by a group of high-flying financiers. In what may well be an example of the way de la Torre is always playing chess four moves ahead, the crucial SEIU support was an outgrowth of a nearly unprecedented overture he had made two years earlier, shortly after he joined Caritas, to invite the union to come into the hospitals and try to organize his workers.

Well, the deal starts to look vacuous if the hospital system can't earn enough money to cover those union contracts.

Can it be that the SEIU is actually a stalking horse for Steward on this proposed legislation?

The campaign seems to have started in earnest in 2013. Robert Weisman at the Globe reported on May 13, 2013: 

An unusual alliance led by the state’s fastest-growing health care company and its largest health care union will press for higher payments to community and safety net hospitals, saying Massachusetts faces a widening gulf between the quality of care in affluent and low-income areas.

The group, the Massachusetts Healthcare Equality and Affordability League, is being launched Thursday by Steward Health Care System, a for-profit cluster of community hospitals, and Local 1199 of the Service Employees International Union, which represents about 47,000 workers in the state.

The follow-up was reported on March 14, 2014, by Rachel Zimmerman on Commonhealth: 

A report released today by the Healthcare Equality and Affordability League (H.E.A.L.) — a partnership between the for-profit Steward Health Care System and the union, 1199 SEIU United Healthcare Workers East — finds that disparities in hospital costs and financing across the state are driving “a vicious cycle” of inequality in health care.

It's hard to be sympathetic to the financial concerns of a union that spent millions of dollars on a corporate campaign to disparage my former hospital.  (More on that story here.)

It's also hard to find sympathy for a union that, even in 2014, supported the gubernatorial candidacy of the former Attorney General who affirmatively acted to enhance Partner's market power.

And it's hard to be sympathetic to a hospital system owned by a private equity firm.

But the issue raised in the ballot proposition is a real one, and one that was aggravated--not reduced--by state legislation in 2012.

Referenda, as noted by the state hospital association's executive vice president in McCluskey's story, are not the best way to resolve complicated policy issues.  Instead, it's time for the legislature to revisit the matter.


Barry Carol said...

For a hospital system with a focus on low costs, the strategy is destined to fail unless it can develop ways to communicate high quality or at least fully competitive quality with nearby hospitals that cost more. Metrics like infection rates and surgical complication rates (risk adjusted) are certainly helpful. However, even if primary care doctors and specialists were much less influential in determining which hospital patients are sent to, we will want to know about comparative quality in treating our particular issue whether it’s heart surgery, hip and knee replacement, general surgery, cancer treatment, labor and delivery or whatever.

For emergency situations, general reputation probably counts for more in the eyes of patients though if I’m having a stroke, I would want to go to a hospital that is equipped to treat strokes quickly. Most well insured middle class and wealthy patients probably don’t want to go to a safety net hospital if it can be avoided. However, one expert told me that in NYC, if you’re the victim of a gunshot wound in Manhattan, the safety net hospital, Bellevue, is very good at treating those because they see a lot of them. The victim should probably ask to be taken there.

As more and more people have high deductible health insurance plans, cost will likely become increasingly important in both determining where to go and deciding whether or not to undergo certain tests and procedures in the first place. Patients need a credible way of determining quality and reputation as well as cost for both hospitals and doctors. We can already do it for restaurants and hotels. Why can’t it be done for hospitals and doctors too?

Carole said...

Mr. Carol
You sure do make good ole' fashioned common sense! I find you so interesting. I'm so curious " noisy " what you do for a living. Your one of three of my favorites!!! BTW...

Barry Carol said...

Carole – Thanks for the kind words.

As I’ve noted in the past, I never worked in the medical field. Until I retired a few years ago, I worked in the money management business for 40 years as a securities analyst and, later, also as a money manager. For the last 18 years of my career, I worked for a large corporate pension fund. I covered many different industries over the years and had access to the senior executives of those companies including CEO’s, presidents and CFO’s. Covered industries included the publicly traded health insurers, drug retail chains and pharmacy benefit managers (PBM’s).

I’ve also had a lot of experience as a patient over the last 20 years. I have a keen interest in markets and efficient resource allocation which accounts for why I often bring a financial perspective to my healthcare and health insurance related comments. That’s why I keep pounding away at issues like price and quality transparency both of which are essential if we expect patients to be able to make more informed decisions about their care and where to seek it. Moreover, as high deductible health insurance plans proliferate and patients become responsible for paying more of their bills out of pocket, the need for price and quality transparency will increase.

Carole said...

Kept my fingers crossed hoping you'd answer this "nosy" ( Wow, just noticed the mistake ) lady's question. I even went back to read older post and comments from You, Retired, nonlocalMD, Anonymous and Mr. Levy. Each of you have something special and unique to offer out.
Must admit though, there are some words I have no clue how to pronounce or even what the heck the definition is! ( :) ) With that being said I wouldn't want you all to dummy it down for us average folks in the public. If it's important enough to me I'll just have to figure it out for myself. I like and appreciate you being you, and now I'm even more impressed!!!! Thanks again and you are so welcomed.