Saturday, January 31, 2015

Venerating Teaching Hospitals

The days of venerating the big, prestigious teaching hospitals are ending.

An earlier posting discussed the desire by Partners Health Care in Boston to acquire some additional hospitals and physicians.  An agreement had been worked out with then Attorney General Martha Coakley to allow it, but that required the approval of Superior Court Judge Janet Sanders.  Coakley gave up her office to run for Governor (she lost) and was replaced by Maura Healey.  Judge Sanders expressed reservations about the deal and held up on her decision, waiting to see what the new AG had to say about it.  After assuming office, Healey said she thought it was a bad idea and on January 29 Judge Sanders issued a ruling rejecting the deal.   Judge Sanders found that the settlement negotiated by the former AG “did not provide sufficient protections to keep Partners’ market power in check.”

According to news stories, the legal situation is such that Partners can go ahead with the acquisition if it wants to, but AG Healey says that if it does, she will file an antitrust suit against it.  The Boston Globe had initially come out in favor of the agreement but on January 30 ran an editorial urging Partners not to go forward with the acquisition.

When Medicare was enacted in 1965 in the face of strong opposition by the American Medical Association, I noted that it was the first time in memory that the federal government had made a medical decision that was contrary to physician advice and that the AMA would never again have the power it had previously enjoyed.  That has turned out to be the case.  During the deliberations leading up the enactment of Obamacare, the AMA was barely heard from and ended up supporting it.

Big, prestigious teaching hospitals have been so respected and venerated that politicians have wanted always to be in the position of supporting them.  Partners – created by the merger of the great Massachusetts General Hospital and the almost as great Brigham and Women’s Hospital – has enjoyed an especially high level of regard – possibly explaining at least in part why AG Coakley was willing the permit them to achieve the ability to totally dominate health care in Boston and Eastern Massachusetts.

The proposition had stirred up a storm of protest by other hospitals and health care agencies in the area and the new AG apparently decided that times had changed and opposing Partners was the thing to do.

In politics, defeating an established power is hard, but once it is done, it becomes easier after that.  So Partners has now endured a very public defeat and it will be downhill from here.

As is usually true in such cases, the big, prestigious teaching hospitals were never as much better at what they did as their reputation had it.  Now we are on the way to a more balanced view of the different kinds of hospitals. 

Friday, January 30, 2015

The Health Care Market

We’ve long had trouble deciding whether the health care establishment can legitimately be considered a market and, if so, how the market should be organized.

Apparently, the White House staff had the same difficulty during the run-up to passage of the Affordable Care Act, aka Obamacare.  According to a lengthy review of Steven Brill’s book “America’s Bitter Pill” by Malcolm Gladwell in the January issue of The New Yorker, the White House health care people and its economics people contested mightily and at length over the issue.  The health care people seemed to think that health care was a special economic case and that its costs could only be controlled by a hefty dose of regulation.  The economics people thought competition was the best way to do it.

The kind of competition being visualized involved patients having a financial incentive to shop around for services.  The argument against that is that when one is sick or injured, finances are the farthest thing from the mind.

Apparently, no consideration was given to a possible role for HMOs and insurance companies.  Those organizations can assemble panels of providers with which they have negotiated prices.  Patients can then choose among competing companies based on what they consider to be the best value in terms of price and quality.  An insurance company can actually assemble more than one panel with different premiums associated with each.

The advantage of that arrangement is that patients make economic decisions relating to health care by choosing an insurance company and a panel of providers when they are well rather than when they are ill or injured..

Saturday, October 11, 2014

A No Brainer?

In earlier postings I have discussed the proposal of Partners HealthCare to acquire some additional hospitals in the Boston area.  That transaction requires the approval of Martha Coakley, Massachusetts Attorney General and Democratic candidate for Governor.  General Coakley has negotiated an agreement with Partners under which she is willing to grant approval.  However, the deal must also be blessed by Superior Court Judge Janet I Sanders.  According to a Joan Vennochi column in the October 5 issue of the Boston Sunday Globe, Judge Sanders has reservations, based in part on the objections that have been filed by a number of parties.

And well she might.

Partners was formed by a merger of the health care giants Massachusetts General Hospital and Brigham and Women’s Hospital.  It is next to impossible to sell a health insurance policy in eastern Massachusetts that does not cover services provided by one of them and the merger made it impossible for insurance companies to play off one against the other in rate negotiations.  Partners took advantage of the resulting strength and forced insurance companies to pay them at substantially higher levels than are paid to other hospitals.

The agreement negotiated by General Coakley purports to deal with this issue by putting caps on future price increases.  But few knowledgeable people believe that a powerhouse like Partners would not be able to find ways around that.

Another point is that if the proposed acquisition did not create inordinate economic power to raise rates, no such agreement would be necessary.  That poses a contradiction.  The agreement, if approved, would permit a concentration of economic power that the requirement for approval was intended to prevent.

Sounds like a no-brainer to me.


Saturday, September 06, 2014

Coming to Peace with ERs

One wonders how long it will take for the gurus of health care to come to peace with Hospital Emergency Rooms.
Hospital ERs have been bad-mouthed for a long time, accused of disrupting continuity of care, thought to be an expensive substitute for doctor’s office visits, and considered a substandard form of primary care used by the indigent and the uninsured.         
Against the background of that mythology, it was widely predicted that when the uninsured obtained coverage under Obamacare they would establish relationships with primary care physicians and the use of ERs would decline. 
That prediction is turning out to be wrong.  A recent indication of that is included in a Modern Healthcare article (Two Americas, August 18) comparing two similar hospitals, one in Oregon, which has adopted Obamacare’s expansion of Medicaid, and the other in Tennessee, which has not.  In the Tennessee hospital, ER use has increased by 2% but in the Oregon hospital it has gone up by 10%.  The conclusion has to be that when people obtain insurance, they use ERs more, not less.
The basic math is not very complicated.  There are 168 hours in a week.  Doctors’ offices are open something like a fourth of those, and then primarily by appointment.  Illness strikes and injuries occur without regard to the clock.
The attractiveness of medical care made available 24/7 without advance appointment ought to be obvious but its perceived competition with private practice medicine has caused it to be ignored – even denied.  Facts will eventually force that to change and when it does perhaps attention can be focused on improving the service rather than on discouraging its use.

Saturday, August 30, 2014

Who Should Be the Buyer?

If market forces are to be used to control the cost and quality of health care, there will be a need to decide whether patients or insurance companies should play the role of buyer.
The pros and cons of selecting insurance companies are currently being played out in Nebraska where Nebraska Blue Cross Blue Shield is locked in a contract dispute with CHI Health, formerly called Alegent Creighton Health/Catholic Health Initiatives Nebraska.    As discussed in an earlier posting, CHI has managed over the years to get payment rates from Blue Cross that, according to Blue Cross, are ten to thirty per cent higher than it is paying anybody else for the same services.   CHI admits to receiving somewhat higher rates, which it justifies by claiming that its high quality services save money by reducing complications, readmissions, etc.   As indicated in my earlier posting on this subject, attempts by others to confirm that claim have not been successful.
Based on what one can tell from the newspapers, the two sides to this dispute appear to be about evenly matched.  The absence of a contract will undoubtedly cause CHI to lose some patients and cause Blue Cross to lose some subscribers and each seems to think that the other will be hurt more.
The current contract between Nebraska Blue Cross and CHI expires at the end of August and according to reporting by the Omaha World Herald it does not appear that an agreement will be reached by that time.  The result will be that Blue Cross subscribers obtaining care from CHI will have to pay out-of-network levels of copays, which will be much higher than they have been paying up to now. 
It seems clear that Blue Cross is able to put more pressure on CHI than any individual patient or group of patients could.  On the other hand, the absence of a contract will result in some inconvenience and added cost to individuals, to which at least some of them will object and put the blame on Blue Cross.
My own leaning is to assign the buyer role to well-regulated insurance companies.  But there is certainly ample room for others to come down in favor of assigning it to patients.

Wednesday, August 06, 2014

Don Berwick for Governor
Don Berwick is running for governor in Massachusetts.
Healthcare people will recognize Don as the founding and long-time executive head of the Institute for Healthcare Improvement (IHI), the organization that more than any other was responsible for igniting the quality movement in health care.  He is a pediatrician who previously had been the chief quality officer for the Harvard Community Health Plan.
Don left IHI to become head of the federal Centers for Medicare and Medicaid during the planning period of Obamacare.  Republicans in the Senate were not about to approve the appointment of a liberal like him and so his tenure there was limited to the 17 months allowed for a temporary appointment.
After leaving his federal duties, Don decided to run for governor in his home state and has been actively engaged in that effort.
I’ve known Don since the early 1990’s when he played a role in getting the quality effort under way at Henry Ford Health System in Detroit, where I was working at the time.  Being a longtime admirer of him, I’ve been somewhat active in his current political effort.  The next step in his campaign is the Democratic primary which takes place early next month.  He is running against two established politicians who have the advantage of established political organizations and better name recognition.  However, Don has been able to match and exceed them in fund raising.
Readers who don’t vote in Massachusetts will note this as a matter of passing interest.  For Massachusetts voters, I recommend voting for Don in the upcoming primary.
Those interested in donating to Don’s campaign or learning more about it can go to www.berwickforgovernor.com.



Saturday, August 02, 2014

Healthcare.gov Debacle

The federal Government Accountability Office, a nonpartisan investigative agency of Congress, reports that the Healthcare.gov debacle was caused by management failures.
Just as I suspected.
The GAO finding was reported in an AP article that appeared in the July 31 issue of The Boston Globe. 
GAO was quoted as stating that the managers responsible for the project lacked “effective planning or oversight practices” for the development of the web page.  It found that “the administration kept changing the contractors’ marching orders….creating widespread confusion” and that “changes were ordered in seemingly arbitrary fashion, including 40 times when government officials did not have the initial authority to incur additional costs.”
Failure of large information technology projects is common in both the public and private sectors.  The main reason, in my opinion, is that managers have the mistaken notion that computer projects can only be understood by computer experts.  They therefore neglect to decide and declare in specific terms what the project is intended to do and how it is to operate.  Then as the project proceeds and they learn how the final product will function, they order changes that disrupt and confuse the planning process – decisions that should have been made before planning started.
Project management remains a large blind spot in the field of administration.  Let us hope that the Healthcare.gov debacle becomes a learning experience.

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