Tuesday, February 10, 2015
Still No Portrait in the Lobby
Anyone who knows me well will be aware of my fondness of aphorisms, one of which is that no hospital administrator ever got his portrait in the lobby for saving money.
As a follow-on to the publicity about the judicial rejection of Partners’ expansion plans and the appointment of its new CEO, The Boston Globe in its February 6 edition ran another front page article under the byline of Robert Weisman, this time headlined Partners looks to mend ties, tame costs.
The article pointed out that “Fears of higher health care costs were at the root of opposition to Partners’ recently rebuffed [expansion] plans” and that “A state judge cited rising health costs when she rejected a settlement in late January that would have allowed the [expansion.}”
Later in the article, the new CEO (Dr. David Torchiana) is quoted as saying “In Massachusetts, there is an almost overwhelmingly singular focus on cost because access has already been addressed” through the state’s 2006 universal health care law.
That same Globe edition carried an article reporting that health insurance companies in Massachusetts are projecting a 7% increase in costs for 2015. That is almost twice the goal of 3.6% set by the state in 2012.
Dolores Hamilton, a human resources director for the Town of Framingham, responded to the announced increase by saying "It's a budget-buster" and the article speculated that many employers would be passing the increase along to employees through higher copays and deductibles. No mention of the need for providers to find less costly ways of providing care.
So we may not yet be ready to live with the pain of serious cost control. There are signs that we are on the road to getting there but hospital executives who hope to see their portraits in the lobby will for the time being have to get it some other way.
Sunday, February 08, 2015
No One in Charge
In my professionally active days, I liked to tell young administrators that a hospital was an institution with nobody in charge and that success came to those who learned to be productive in that circumstance.
With all the changes that have been taking place in recent times, I came to think that perhaps that advice was out of date, but apparently not so.
Partners HealthCare, the Boston health care behemoth, has just appointed a new CEO, one Dr. David Torchiana. Since 2003, Dr. Torchiana has been chief executive of the Massachusetts General Physicians Organization, consisting of some 2,000 physicians on the medical staff of the Massachusetts General Hospital.
The appointment was announced in a front page, above the fold article in the February 5 issue of The Boston Globe under the byline of Pryanka Dayal McCluskey and Robert Weisman. Part way into the article, the reporters, referring to Dr. Torchiana, state that ”In the medical world, the doctor group he heads, consisting of some of the top doctors in the nation, is considered as influential as the hospital itself.”
So it seems that my old observation still applies at the Massachusetts General Hospital. It is an arrangement that can be made to work as long as nobody cares about cost. But that is no longer the case. The Globe article also mentioned the recent denial of the Partners expansion plan by Suffolk Superior Court Judge Janet L. Sanders, who, according to the reporters, “was concerned that a bigger Partners would mean higher health care costs for consumers. Partners is the state’s highest cost health system.”
The reporters did not connect the reference to influence with the cost issue, but Dr. Torchiana will have to.
Friday, February 06, 2015
The End of Single Payer?
The dream of single payer health insurance for the U.S. may have just met its end in Vermont.
For true liberals, national health insurance, aka single payer, has long been a holy grail – a dream plan for financing health care to be continually pursued. Every time health care reform has come up – going all the way back to Franklin Roosevelt – the single payer people have thought their time had come, only to be disappointed. During the process of legislating Obamacare, they plumped for something called the public option – a governmental health insurance program that would compete with the private sector – only to see President Obama abandon their cause by declining to support it.
Not to be discouraged, the government of the liberal state of Vermont then proceeded during the following year (2011) to adopt legislation authorizing a single payer program of its own to be called Green Mountain Care. The law specified that the Governor (Peter Shumlin) was to develop a detailed financial plan by 2013. He missed that deadline but in December of 2014 issued a report saying that he would not seek funding for the law, saying that “In my judgment, now is not the time to ask our Legislature to take the step of passing a financing plan for Green Mountain Care.”
Governor Schumlin’s action was reported in an article appearing in the January 25 edition of The Boston Globe (Dream meets reality) under the byline of Jay Fitzgerald. According to that article, “Governor Peter Shumlin released a financial report that showed the cost of the program would nearly double the size of the state’s budget in the first year alone and require large tax increases for residents and businesses.” The article also said that the decision “signaled that the dream of universal, government-funded health care in the United States may be near its end.”
I have for many years been pointing out that national health insurance is a remedy for inadequate financing, that the problem in the U.S. was excessive financing and that we therefore would never have single payer.
I rest my case.
Thursday, February 05, 2015
Partners Decision Reach
The rejection of Partners Health Care’s plan to acquire additional hospitals and doctors in the Boston area may have widespread implications.
My earlier posting suggested that it marked a decline in the veneration of big, prestigious teaching hospitals.
An article in the January 31 issue of The Boston Globe (Partners decision could reach far) suggests that another consequence may be an increase in the scrutiny given to the growth ambitions of major hospital systems.
That could well be the case, partly because of Partners’ prominence as a provider of health care, but also because of growing general concern about the relationship between the high cost of health care and the monopoly power of hospitals, which have been rapidly consolidating into large, regional systems.
Laws prohibiting monopolies have always covered hospitals, but there hasn’t been much public concern about the issue and the laws have been rather casually applied.
Underlying all that is the question of whether we want market competition in health care at all. If we would rather depend on regulation to control cost and quality, then monopoly status doesn’t make much difference. But if we are to rely on market forces, then monopolies are to be avoided.
The ruling in the Partners case was somewhat ambivalent on that issue. On the one hand, it took the position that the control methods provided in the agreement were inadequate. But it also expressed reservations about the ability of Partners to demand higher prices, using the market power it would gain if allowed to expand further.
Perhaps the Partners episode will serve to move us along towards resolution of the matter.
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.