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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.

Wednesday, July 30, 2014

Doctors and Insurance Companies

Should insurance companies have the right to overrule doctors?
That question is currently being debated indirectly in the Massachusetts legislature.
Massachusetts has recently experienced a spate of deaths related to recreational drugs and the families of addicts are pressing the legislature to require health insurance companies to cover inpatient treatment.  The insurance companies, with the support of a number of organizations and individuals in the treatment field, claim that inpatient treatment of drug addicts has been demonstrated to be outmoded and usually unnecessary. 
The issue was the subject of a lengthy article in the July 29 issue of The Boston Globe discussing two bills dealing with it, one in each house of the legislature.  Reading through it, I was struck by the following sentence appearing in all innocence about a third of the way through:
“Especially worrisome to insurers, both bills limit insurers’ ability to override treating physicians’ decisions.”
In my day, the very idea of insurers overriding medical decisions would have been rank heresy, but apparently no more.  Now it seems as though it is well enough accepted that insurers can openly claim the right to do it.
I think it is something to worry about.  But the medical profession has brought it on itself.  By failing to require its members to adhere to best practices, it has created the need to which insurers are responding.
I hope the day is not too far off when capitation will be the dominant form of payment and decisions about effective treatments are made by providers.  I would much rather those decisions be in the hands of my local hospital and its medical staff than in the hands of insurance companies trying to maximize value for investors.

Saturday, July 19, 2014


 Healthcare Economics
There is something of a flap going on in Massachusetts over the desire of Partners Health Care System (formed by the merger of Massachusetts General Hospital and Brigham and Women’s Hospital) to acquire three more hospitals in the Boston area, two in the north shore and one south.
Partners has for some time dominated health care delivery in eastern Massachusetts.  Its reputation is such that it would be nearly impossible to sell a health insurance policy in the area that didn’t cover its services.  Taking advantage of that, Partners has been able to leverage health insurance companies into paying it considerably higher rates than are paid to other providers.  That has caused some grousing, but up until now not enough to spur much in the way of action.
Partners’ proposed acquisitions require regulatory approval and a few weeks ago Martha Coakley, the state’s Attorney General, announced that she had reached agreement with Partners on conditions that would allow them to proceed, subject to approval by the Suffolk County Superior Court.  That has produced a small storm of protest.  Competing hospitals have filed objections.  Two gubernatorial candidates have come out against it.  Now the state’s Health Policy Commission, an advisory group, has expressed reservations.  The story has received coverage in the local press.
In my mind, the Partners merger should never have been allowed.  Its almost sole purpose of gaining negotiating power with payers was clear at the time to anyone who understood health care institutions and has been confirmed by its actions ever since.  But people have not wanted to believe that.   We have been very slow to accept that health care providers are not simply organizations engaged in the healing ministry, but also entities that engage in economic behavior.  When they find themselves with economic power, they exercise it. 
Maybe we are becoming more realistic about the matter.

 

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