Academic Medicine…
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For the past several years, I’ve expressed my concern about the general drift in Massachusetts away from relatively inexpensive, perfectly good, but unbranded community health care, toward more expensive, not necessarily better, but wonderfully branded Academic Medical Center (AMC) care. It’s no secret that people in Massachusetts use AMC providers far more often for routine care than people do in other states. In Massachusetts, about 45 percent of all health care encounters involve an AMC or an AMC doc, while the percent in most other states is around 12-15 percent. Community hospital leaders in Massachusetts have estimated that our collective use of AMCs for services that could be (and probably should be) provided in community hospital and community physician office settings costs the Commonwealth more than $1 BILLION annually in increased health care costs.
So I follow the news these days about Mass. General Hospital and Partners HealthCare with a lot of nervousness and trepidation. To wit, MGH is building a monstrous outpatient/day surgery facility on the North Shore of Boston, and they just got approval to construct the biggest inpatient expansion in downtown Boston — ever. And Partners HealthCare (actually, the MGH and Brigham and Women’s) just announced the construction of a sports medicine facility in Foxboro.
Every single day, I get hounded and pounded — and rightly so — by politicians, businesspeople, municipal officials, labor representatives, and normal every day citizens about the rising cost of health care. Yet right down the street from my office, the most expensive health care delivery system and the most expensive full service hospital in Massachusetts are engaged in big-time service capacity expansions. Expansions that will surely take business away from other, less expensive, less well known, but perfectly capable, care delivery systems.
I’m starting to wonder if this trend is inevitable. Perhaps folks like MGH and Partners will continue to expand in the city and in the suburbs, their practices and practitioners will be welcomed by patients who admire all they stand for and represent, and we will continue to replace inexpensive, community-based care delivery options with higher cost AMC care delivery options — until there is no community-based care left to replace.
And we’ll continue to complain about the high cost of health care. Thoughts and comments welcome…
As healthcare becomes more consumer driven, I think we can count on many of the trends of the retail industry to develop on the healthcare side. One of these trends will be the “big guys” coming in and forcing “the little guys” out of business. On the retail side, the larger companies force the issue through providing lower cost product. Is it safe to say that the rise of the provider groups and referral circles, etc. have ensured these large healthcare providers the same “competative advantage”? If so, what can consumers, or their health insurance companies, due to fight this trend and keep the playing field level? Also, what prevents these larger groups from limiting their patient’s (or customer’s) acces to care outside their network?
So instead of expanding and building wondrous new facilities, why aren’t the big guys reaching out to the local hospitals and medical centers by offering personnel rotation or “name” care. Or even more startling, relocating whole divisions to the smaller places. The local hospital where my children were born is currently empty and will undoubtedly become condos. Yet in it’s day, it served a large population.
On the other hand, with stories of local hospitals that have high death rates, can you really ask why people would rather go to the city to hospitals they perceive to be “better” or doctors they think are “smarter” or better educated and trained.
In theory, if MGH builds a community hospital in the suburbs but has no residents or interns at that facility and it generally functions like any other community hospital, why should it have higher costs? If anything, it should have lower costs for supplies and technology because of the economies of scale inherent in a large organization. For consultations between doctors on more complicated cases, it could make more efficient use of electronic and/or video conference technology to access the expertise at its flagship AMC. Patients, for their part, would understandably feel more comfortable and confident with the brand name facility, especially if they are being treated for a disease which that hospital is especially well known for.
Presumably, the AMC’s research function should stand on its own which means its mission is paid for via research grants and other non-medical sources of income. It would also probably be better if there were general taxpayer financing to cover the costs of the hospital’s teaching mission. If that were the case, it would probably be OK if all community hospitals, clinics, imaging centers, etc. were associated with an AMC. At the very least, they should be able to do a better job coordinating patient care and leveraging technology.
So, in a perfect world, the costs associated with research and medical education would be financed outside of the health insurance system. Complex medical cases like organ transplants and very premature babies needing a sophisticated NICU would be handled by the flagship AMC and billed appropriately. Routine cases, especially those receiving treatment in the much lower cost satellite facilities, should be billed in line with the costs of operating those facilities.
I wonder what a Porter-Teisberg perspective would add to the discussion? Would they consider this a necessary round in focusing competition on improving quality? Or just the opposite? Depends if the actual outcomes are better or not, I guess. But then again, how would we know?
The keyword here is “capable”. Somehow the assumption is that the smaller and less known hospitals are “capable” of delivering the care one comes to expect from MGH.
From my personal experience the small hospitals are not capable of delivering care. I can give you half a dozen concrete examples off top of my head, including death of my friend at hands of incompetent staff, waiting in the emergency center with a 2 yr old with a head wound and blood gushing. Of course the blood dried up before we saw the doctor because it took a little more than 8 hrs for a overworked practitioner to show up. Or me in agony on the floor of a different emergency room on the night that I thought I am dying and nurse yelling to stop the theatrics and calling the cops.
I can go on and on, but my point here is this, every single small hospital that I dealt with should be closed down. It is simple as that. When it comes to the health of my family the only 2 places I trust for providing a adequate care are MGH and Beth Israel.
Part of the reason that that “people in Massachusetts use AMC providers far more often for routine care than people do in other states” is that the AMCs ARE the community hospitals for virtually all of Boston and for many close-in suburbs. But part of the reason is that people believe that they get higher quality care at the AMCs. Until you and the other insurers and the state start publishing accurate and timely information about patient outcomes, that belief will persist. (And by accurate and timely, I do not mean incomprehensible websites with two-year old data based on administrative records rather than real-time clinical outcomes.)
At BIDMC, we are making a concerted effort to try to direct patients to our own community hospital in Needham, to Milton Hospital, and to others where care is good and convenience is the watchword. Even there, though, we sometimes have to work hard to persuade people that they do not have to drive all the way into Boston, fight congestion, pay for parking, and so on. Old habits die hard.
We work at this because it makes more sense to reserve beds in our downtown hospital for the difficult, high acuity cases — the ones where we really can make a difference — and, by the way, the ones that have higher reimbursement rates and help us pay for the expensive equipment and facilities needed in a tertiary care facility.
BC is right, too, that the community facilities associated with AMCs should have lower costs, for a variety of reasons.
Another thought. I am a firm believer that AMCs bring great things to clinical care, research, and teaching and are indeed the crown jewels of the medical system. However, unless we AMCs learn to take the lead in pursuing quality and safety and cost efficiency, there will be rising pressure from business subscribers on Charlie and the other insurers, and also from federal and state legislators who have to figure out how to pay for Medicare and Medicaid, to reduce the support for AMCs and their tri-partite mission.
I think it is in our hands to demonstrate that we can design and practice the science of care, as well as the science of disease, and show that the AMCs have even more important value for the future. But I do not yet see pervasive evidence of this intent by my colleagues across the country.
Ian M - The big guy/small guy analogy you draw to health care only works in part. It’s true that we’re witnessing the kind of consolidation in health care that we’ve seen in many other sectors (it’s going on in the health insurance space as well - there are half as many health plans in the U.S. today as there were ten years ago), but the leverage of larger players in health care doesn’t drive down prices for purchasers, it drives them up! In the absence of publicly available data on cost and quality - and a consumer that’s on the hook financially for more than a co-pay- more market share and more clout on the provider side generally translates into higher prices for payors. That’s because most large provider organizations contract with plans and purchasers “in toto” - so if you want any one of them, you have to have all of them. In addition, employers prefer “all-in” networks - that is, provider networks offered by health plans that have all the providers in a region “in network.” That makes it very hard for a plan to say “no” to including large providers in their network, no matter how they feel about the economics of the situation (witness Tufts Health Plan and Partners HealthCare about eight years ago - which was kind of the defining moment for this sort of thing). So don’t expect consolidation to produce lower prices, unless we have a lot more public information, and the consumer has a lot more “skin in the game.”
Tim and Maxine - the information that is available - and there’s a lot of it - shows outcomes for most procedures at community hospitals that meet or exceed the performance of Academic Medical Centers. I wouldn’t expect people to have very high end procedures at community hospitals, but the vast majority of health care services are what I would call “blocking and tackling,” and the community hospitals score well on these kinds of services. We’ve all heard the stories about one facility or another, and they’re all unfortunate, but the notion that community hospitals can’t deliver on basic hospital care isn’t supported by the evidence.
BC and others - As a general rule, services provided by Academic Medical Centers cost pretty much the same, no matter where they’re delivered. They’re approximately twice as expensive as a good community hospital, and even after adjusting for case-mix (the relative level of illness of the patients seen by each institution), AMCs are still about 50% more expensive than most community hospitals. The Boston Globe editorialized about the price difference this morning. It’s an issue. We can’t, as a society, complain about the high cost of health care if we want to use very high cost care for everything.
Paul - I share your concerns in your second blog. Government officials are in a “DO SOMETHING” frame of mind about the cost of health care, and it’s very hard to know what that might mean or how it might translate. BC talked in his post about the possibility of having graduate medical education funded through general tax revenues instead of through the payment system. That might be one way the government goes after the cost issue, but I’m not sure it will manifest itself in a way that works for AMC’s.
And as a member of the MA Health Care Quality and Cost Council, I’d be interesting in hearing what would you consider to be adequate data? Elliott Fischer and Jack Wennberg and the gang up at Dartmouth have been publishing studies on variation and quality and infection and mortality rates for years using the stuff we’ve got - and no one disputes the legitimacy of their findings. The MA Health Data Consortium’s been working with data extracts submitted by MA hospitals to the MA DPH and others for years, without much debate about the relative value or utility of the information. Providers use Soluticent’s datasets to claim they’re “best in class” performers. Would they do so if they felt the information had no basis in fact? Many specialty societies - especially in the surgical arenas - have pretty well developed criteria for measuring and reporting on performance. Isn’t there a pretty good baseline of information to start with on this?
Appreciate all the commentary.
Charlie, thanks for the direct response. Looking back, my initial posting was not worded very well. The “competitive advantage” I mentioned was in reference to the exact influence that expanding provider groups could exert over consumers (both directly and indirectly-through health insurance) that you made note of in your posting. As a follow-up question, could we expect to see the same pattern continue to emerge on the pharmacy side? The recent merger between CVS and Caremark could be pointed to as an indicator of such a trend. Mergers like this have the ability to severely limit competition by ensuring an exclusive working relationship between the retail pharmacy (the consumer’s interface) and a single vendor. Other third party vendors are forced to compete in what would now appear to be a weighted market (especially given the size of the two merging parties). Would it be safe to assume that this will have a similar effect on costs?
“Many specialty societies - especially in the surgical arenas - have pretty well developed criteria for measuring and reporting on performance.” The American College of Surgeons database on surgical outcomes — extensive, up-to-date, and clinically valid — cannot be made public under the ACS’ rules.
The Dartmouth studies are excellent analytically but do not provide timely and up-todate information a consumer can use.
Ditto for the others.
All I know about Solucient is that we get awards every few months, but I have no idea what is behind them.
I guess it depends what how you want to use numbers. As a consumer, I can get up-to-date information on a variety of comparative products and services, except for health care.
I wonder how many doctors are aware that AMC’s charge the same for a given procedure no matter where it is delivered and that their charge is significantly higher than a community hospital commands for the same service, test or procedure. Don’t employers have an interest in making sure doctors and consumers have adequate price and quality information? While care delivered under emergency conditions is a separate matter, why can’t I easily learn the contract rates that my insurer pays local providers for diagnostic tests, elective procedures, and services that are scheduled well in advance (including all outpatient services)? Shouldn’t my doctor have easy access to good price and quality information as well so he can more easily direct me to the most cost-effective provider? Hasn’t there been a lot of convergence among insurers in what is actually paid for a given procedure? Where is most of the resistance to transparency coming from and what will it take to overcome it? Just as supermarkets have learned to match or come close to Wal-Mart on high volume, commodity items like cases of soda while charging considerably more where they have a quality and service advantage, I’ll bet that AMC’s would be much more competitive in their pricing of commodity services like MRI’s and other routine procedures while they would compete on both price and quality with other AMC’s on complex procedures like cardiac bypass surgery or organ transplants.
Price and quality transparency could make a major contribution toward rationalizing healthcare delivery including squeezing out excess capacity. Confidentiality agreements that may be impeding transparency should be eliminated, by legislation if necessary, in my opinion.
OK, let’s not dance around the issue. Here are the facts: Certain very large health care systems (e.g. Partners) have significant clout in their negotiations with insurers because insurers believe that they cannot do business without them. Other health care systems (e.g. community hospitals in geographic areas with some amount of hospital choice) do not have the ability to negotiate rates with insurers that are anywhere near the level of the large health care systems. This means that the rich get richer and the poor get poorer. Rates are not set merely based upon costs (reasonable or otherwise) or what is “fair” because the market is not a fair place. If we wait for market dynamics to change things dramatically through more public information, there won’t be very many community hospitals left that are not affiliated with the big guys. That’s because the market incentives are not working in health care and they won’t any time soon, notwithstanding the steps we are taking towards transparency and “consumer driven health care”. Unfortunately, the public regulatory oversight concerning expansion of the “big guys” doesn’t allow for consideration of other alternatives. By unanimously giving its rubber stamp of approval, the Council has further solidified the current power structure. I share Charlie’s pessimistic forecast of the hospital marketplace in the foreseeable future and the cost we will be paying for this continued consolidation.
All - I’m hoping the embryonic Health Care Quality and Cost Council - which was also created by the now world famous health care reform act in Massachusetts, can shed some light on the cost and quality issues surrounding health care. It’s just getting started - has only one person on staff - but has been given broad latitude by the legislature to collect information from plans and providers and to make that information available to the public at large. And I think providers will be at least as interested in this information as anyone else. I hear this every time I talk to providers about data. As far as the ACS data is concerned, I’m aware that it’s mostly for other surgeons at this point, but I expect that will change over time. And I remain astonished by how much data public agencies like the MA Department of Public Health collect from hospitals, but don’t make publicly available, on cost and quality. Much of that information finds its way into the Solucient data sets Paul references above - and it includes lots of perfectly accessible information - how many times individual docs and specific institutions perform particular procedures, case-mix adjusted infection and complication rates, mortality rates, recidivism rates, and the like.
At this point, what this really needs to get going is sustained, committed focus. I’m hoping the Council can give it that.
And Ian, your question about CVS, Walgreen’s etc., is an interesting one. I’m working on the assumption that these guys have so much competition (Wal-Mart, Stop and Shop, BJ’s, mail order.), that it’s hard for me to see how CVS/Caremark creates price leverage. This is a market with lots and lots of competition - at least for now.
I agree with the point Leanne makes re Partners and how they are taking an unfair percentage of the total premium dollars to care for their member population. Their huge profit margins give them the unique ability to invest in facilities like Danvers, the new MGH building and the new BWH cardiac center. Further, they can attract physicians and nurses by paying better than other systems and they can buy the latest technology and systems. This all adds up to better doctors delivering the most advanced care in the best facilities. No other systems or hospitals have this ability and they will ultimately deliver second rate care to their patients. Certain geographically isolated hospitals like Winchester and Norwood in wealthy communities will do OK but there are a large number that are barely making any profit or are losing money. Short of joining Partners like Faulkner did, I think you may see a number of hospitals facing real challenges and these hospitals currently care for a lot of patients and employ a lot of people. If Partners continues to grow their market share they will be taking care currently delivered at community prices and will be delivering it at their inflated prices which will drive everyone’s premiums up. I keep thinking that a plan like Tufts was able to grow to about 500,000 members before they added hospitals like BWH and then MGH (which was the 52nd IPA to join Tufts). Maybe there is a market for a much lower cost product that would attract people seriously willing to avoid Partners facilities? I just don’t think there is much time as Partners seems to get stronger every quarter and they are about to beat Beverly over the head with their Danvers facility. These guys don’t take prisoners and I am not sure if others are capable of surviving in the areas they seek to dominate. Given the fact that Partners basically tells the plans what they want to be paid (or they threaten to walk away like they did with Tufts), I would think a strong case could be made that Partners is already a monopoly that should not be allowed to negotiate as one entity. That would require state involvement which will never happen.
“No other systems or hospitals have this ability and they will ultimately deliver second rate care to their patients.”
Aha. Now we see how insidious perceptions can be, in that you have inadvertantly spread the story. Many people already assume that Partners care is better than others, based on size and reputation. But, if you look at actual clinical outcomes, it turns out not to be true. BWH and MGH are great places, but so are BIDMC, Tufts-NEMC, and BMC. I’ll match our surgical, procedural, and other results any day against the Partners hospitals. In the communities, likewise, look at independent hospitals like Beverly, Winchester, and Cooley Dickinson for super service and clinical results, just like the Partners hospitals. Ditto for Atrius and the other independent physician organizations.
Paul - My point is that Partners has cash flow and reserves that are unmatched by any other hospital or healthcare system. They will continue to have the best facilities, the best technology and the best physicians because they can afford pretty much anything they want. Over time, other hospitals and systems will be left with older facilities and older technology and machines which I think will ultimately lead to second rate care. Look at an area like radiation therapy where MGH has the newest machines that deliver radiation in a more focused way compared to older machines that other hospitals continue to use. I would say that MGH’s ability to afford this newer machine results in better care to the patient and this is all made possible becuase they have the money to pay for it while other hospitals don’t. There are a lot of hospitals (including Tufts-NEMC) that won’t be able to keep up with Partners as time passes and will deliver older, second rate care in areas like radiation therapy that require huge amounts of money to deliver the best patient care.
I certainly get your point and, trust me, understand the effect of Partners’ market power to obtain higher rates from insurance companies.
I just don’t want anyone to get the impression that clinical outcomes in our hospital, for example, are any worse than in theirs. You see, again you say: “They will continue to have the best facilities, the best technology and the best physicians because they can afford pretty much anything they want. ” That implies that they already do have the best of all these three categories. It is just not so. In your RadOnc example, we have the Cyberknife — the only one in the city — which results in highly concentrated and directed radiation therapy. I think, too, we have the only hybrid cardiac surgery/cardiology catherization operating room in the city. Likewise, we have world class doctors who are every bit as good as theirs. And we have doctors who work cooperatively — for example to establish a unified cardiovascular institute — to coordinate care across the disciplines of cardiac surgery, cardiology, and vascular surgery. We also have extremely advanced clinical information systems, including the only system that permits patients to have protected electronic access to key medical records.
While I would certainly never turn down higher payments from insurers (and will continue to press for more — based on quality delivered, rather than market power), money is not always the determinant of high quality.
Love this…Anyway, I agree with Paul on this most recent debate - that being “better fed” financially doesn’t necessarily mean being “better.” In fact, I’ve never been inside the MGH as a patient - and it won’t be the end of the world if I never do. There are plenty of outstanding care providers and care providing organizations in Massachusetts, ones that other states and countries would give their eye teeth for, that have nothing to do with Partners or MGH. I think MA has plenty of stars, quite separate and apart from the Partners system.
Nonetheless, one can argue that Partners sets the table for everyone else - and that all providers benefit from their negotiations. If Partners gets “X” out of their negotiations with TAHP, HPHC, BC/BS of MA, etc., then everyone else gets some percent of “X,” which might be, in fact, higher than it would have been if Partners didn’t set the bar so high to begin with. When Partners decided some seven or eight years ago that they were going to demand huge rate increases year after year after year out of the private employers and health plans to “re-balance” the health care system in MA, most other providers benefited from that. They didn’t get the increases that Partners got, but they shadowed the increases Partners got, which was still substantial.
What I don’t know is whether or not this was a good deal for MA overall. Jack Connors is quoted in the Boston Globe today as basically saying that “yes” - more money for Partners and the other health care organizations in MA is/was a good deal for Massachusetts. We’ll see.
And as I’ve said before, I still wonder about whether or not Partners’ continued expansion into places like the North Shore simply means an even more expensive system over time, at the expense of less expensive alternatives like Beverly Hospital - which by all accounts is a terrific community hospital. If MGH’s foray into Danvers drives 5 or 10 percent of Beverly’s existing or anticipated business away from Beverly and into their Danvers facility, then no amount of money on the rate side can or will make up the difference for Beverly. How is MA then better off?
All the comments exemplify the point of the authors of the recent book on “redefining health care” - that providers are competing on the wrong thing; that is market share; rather than value (defined as outcome per dollar spent). The authors cite this as a zero sum game with winners and losers based on market share alone, rather than a system where overall prices are driven down and value increased by competition based on outcomes AND cost efficiency. (Providers not providing this value cannot compete and go out of business.)
What is happening in Boston or Mass. is merely a microcosm of what is happening across the country in metropolitan areas. There needs to be a fundamental change in the delivery system based on public reporting of who gives the best “value” (e.g. the best outcomes for the least $$). As Charlie comments in Paul’s blog, Medicare must lead the way here - yet Medicare does not consider cost efficiency in their reimbursement decisions. Charlie; I see the insurers as having the most effective lobbying apparatus to change this nationally. True or false?
Oh, and I forgot to mention that MGH vs. BIDMC provides an illustration of the lack of competition on value - on the Hospital Compare website, BIDMC outperforms MGH on a number of outcome-related metrics, while I am guessing from your comments that MGH is better reimbursed?
And no, Paul does not pay me; I don’t even know him! (:
[...] out the compelling conversation on Charlie Baker’s HPHC Blog Let’s Talk Health Care on academic teaching hospitals in [...]
Please submit a resume, br: You do good work!
br - I think it’s fair to say that MGH and BIDMC and their clinicians are both paid at the upper end of the HPHC fee schedule, and given the relative intensity of the patients they see, they should be. Suffice it to say that both institutions are well paid, relative to their peers. But as Paul has noted, more is always better than less(!).
And your comments about Michael Porter’s book are good ones. Getting from here to there, however, is a big lift - one that may take a long time - or might not happen at all. I was kind of bummed by your macro comments, mostly because I tend to agree with them.
And the private insurers have engaged Medicare on the issues you raise many times over the past couple of years. Some of us have even been crazy enough to serve on various federal panels to try to move in this direction. Based on that experience, I can tell you with great confidence that this will be a really slow ride.
Charlie;
Thanks for your comments. I do think Porter et al’s analysis (thanks, I had forgotten his name) of what’s wrong is excellent; I am somewhat skeptical on how their solution would be implemented in a practical manner. However, I think if the public value (outcome/cost) reporting did begin in earnest, that would tend to accelerate implementation of whatever solution, simply because people would be shocked to see the numbers. Things tend to happen faster when public data appear, the media gets hold of it, it’s an election year, etc. I am beginning to agree with Paul that one can waste years trying to achieve consensus on what data to publish and a process for publishing it, or one can take the plunge, get some data out there, and fine tune it as you go.
Just a thought on public perception of value…I work in one of the area systems and have access to (via the Consortium, DHCFP, HealthShare, UHC, etc.) more data related to infection, complications, recidivism, Core Measures, charges, costs, and mortality than one could ever need to make an “informed” decision about where to go for care.
But if I ever have a headache (beyond those normally onset from working in healthcare in MA) I’m going to MAH because that’s where Ben Affleck went.
The public is fickle…transparency is great for commodification, but the public may (ultimately) care less.
P.S. I don’t work for CareGroup but am beginning to think I should.
Paul - I agree BIDMC is a state of the art facility with leading edge technology like the Cyberknife (which I thought was available at NEMC as well?) and vast resources that lead to the positive clinical outcomes you cite in your posts. I think my point about Partners domination was directed more at the myriad of other local hospitals that are simply not able to keep up with the likes of BIDMC, BWH and MGH. I could rattle off a bunch of local hospitals that are barely breaking even or losing money and simply don’t have the resources to keep up with the likes of Partners and BIDMC. These hospitals still deliver care to a large patient base and employ a lot of people and their future looks very tenuous in my opinion. The threat to insurers like Charlie and HPHC is that these doctors and hospitals will join with Partners to get access to their better reimbursements which will just continue to grow the aggregate cost of healthcare here in eastern Massachusetts…. something employers will find very tough to swallow.
AC’s bumming me out. Unless he/she’s just pulling my leg, the message is that even the informed, who should know better, will follow the celebrities. Oy.
And sg’s observation is kind of where I started, with one significant difference. I believe many - maybe most - of these community based institutions can make it, can prosper and can succeed, doing what they do now going forward, as long as they don’t continue to lose “basic” medicine business - not high end business - to an expanding AMC footprint. Beverly Hospital’s future - even with Lahey down the street and MGH on the north side of Boston - was never in doubt - until MGH decided to build a 500,000 square foot facility to do mostly “basic” medicine just down the street from them. That’s different.
And by the way, I know I end up sounding “anti-MGH” and “anti-Partners” in these posts. I’m not. I’m simply not convinced, nor have I ever been, that they represent the only high performing health care delivery options in EMass. EMass has lots of great health care providers, some of which happen to belong to MGH and Partners, but many of which do not - despite Ben Affleck’s affection for one over the others(!).
It’s just like you said at the top, Charlie. The AMCs are “wonderfully branded.” I think when it really comes down to it, that’s the bottom line. People will go on name recognition and effective advertising, even if it means paying more. If fully transparent pricing (as mentioned in your next post) ever becomes widespread, healthcare providers will still have to attract customers (when did we stop being patients?) the same way anyone else does: marketing. I can only assume that if the need to advertise increases, so too will the need for revenue.
Charlie - I would 100% agree with you that one of the biggest problems community hospitals currently face is “leakage” to the high profile AMC networks. I am pretty sure our current HPHC deal even contains a tertiary leakage incentive but it is not significant enough to really encourage doctors (especially PCPs) to actively work to keep care local. Absent a significant financial risk environment, why is a PCP going to try and deter a patient who wants to go to the Baptist for a knee or hip? Some provider networks continue to use risk based contracting (Vanguard, MACIPA, etc…) to influence physician referral patterns, keep care local and this can result in a potentially significant financial reward as a result. Short of this type of incentive, I think it is difficult to expect a physician to take the unpopular and difficult position of telling a patient something they may not want to hear. You would know more about overall leakage stats for all of the HPHC provider groups but I don’t see the current pay for performance tools as having much impact on PCPs and other doctors to keep appropriate care local should a patient choose otherwise.
Which takes me back to where I started - more data, publicly available and understandable - on price and performance has to be part of the answer. And I look forward to encouraging and promoting the work of the newly formed MA Health Care Quality and Cost Council as it begins its important work on this site (and others).
To ac: People don’t care about this stuff because they don’t have to pay for it and, it seems, because Boston is loaded with good hospitals. (I don’t live there). You can bet that I, who have an HSA with $6000 deductible, research the dickens out of places before I choose. The one advantage of having an HSA is you don’t have to go where your provider “participates”. I recently used this advantage to go to a place where I, a pathologist, thought the pathologists were better instead, of the local hospital.
br - tell me/us about how you ended up with an HSA plan, and how you feel about it so far…
iHealthBeat article (no idea how good these folks are as an info source but thought this was timely):
“The Opacity of Health Care Transparency Efforts”
http://www.ihealthbeat.org/articles/2007/6/4/The-Opacity-of-Health-Care-Transparency-Efforts.aspx?ps=1&authorid=1571
And to (gently) continue pulling legs re: following celebrities for healthcare…br’s right in that EMass residents face a different (lessened) burden of choice around Boston for excellent healthcare. But the public, in infinite wisdom and impressionability, still hears the bits that are newsworthy (maybe Ben Affleck researched the dickens out of MAH first?). I can query charges/costs for all area hospitals, compare national benchmarks, check HEDIS scores, and research many dickens…or I read that Doug Mientkiewicz went to the MGH. The Quality and Cost Council shows the Baptist (state FY04) had higher than average costs for hip fracture but I also know that that’s where the Celtics go, or that BIDMC is the Sox’s hospital, or that whatever performer went to MEEI…transparency certainly has its work cut out for it.
Ian M mentions marketing and I can’t help but wonder the implications as I watch our fiscal allocations shift…can anyone say Pharm?
As far as HSAs are concerned, I believe they’re great on paper…reduce inefficiencies by not fully sparing consumers the marginal cost of their marginal actions, but maybe limited in application (borne out by utilization rates?). Consumers purchase insurance for the peace of mind, and HSAs don’t necessarily provide this (”use it or lose it”). I don’t know that I could sell my peace of mind for a (pittance of a) tax shelter.
Charlie - Just curious, who is sitting on the MA Health Care Quality and Cost Council and who decided on these folks? One of the things that has worried me about the entire new MA healthcare law is that there does not seem to be as much public discussion about who is making decisions that are changing the direction of healthcare in Mass and who stands to benefit financially? We all know that the large and politically well connected “free care” hospitals have financial guarantees to make them whole and Partners signed off after getting large Medicaid rate increases. This is all public money but I really don’t think that the public has any idea of these “back room” deals and the amount of money involved to get this bill into law. This new council could be very influential and to have credibility it should be as open and public as possible. I am glad to see that they had the wisdom to select a person like yourself who is clearly interested in the big picture the role healthcare plays in the health and economy of our state.
Charlie;
I will let my husband, cr, respond to your query about how we came to an HSA and how we like it. He was more involved in the details of this decision. We are both retired physicians below Medicare age, for background.
We like the HSA well, having participated in an MSA originally since 1997 and managing it ourselves. It was almost derailed recently when an example of the “death spiral” policy activity by our insurance company was discovered. Fortunately that problem has been mitigated - at least for now. We are able to cover approximately 50% of our maximum yearly out-of -pocket deductible with the tax free earnings of the HSA assuming a 10-12% APR market return.
I believe that the “death spiral” health insurance policy practice should be outlawed and any who practice it should be drawn and quartered (without anesthesia). It is an inherently dishonest mechanism of business and guarantees those who develop health care needs are cast aside when they most need insurance, and the insurance company skates free with most of the previously paid premiums! From the insurance industry’s standpoint the “death spiral” method of writing health insurance is as close to legalized extortion as one can get without visiting the inside of Leavenworth. Great work if you can get it!
Yikes! Without anesthesia! Seems a bit harsh. Please- expound a bit on the death spiral. While I’m obviously familiar with the term, I’m not sure I understand the context. Was this an individual policy? Group policy? I’d like to comment on the spiral issue, but need more information to do so intelligently.
[...] it was Charlie Baker in his blog (click here ) talking frankly about the difficulties in this market dealing with the seemingly insatiable desire [...]
Do people know that in addition to getting paid higher fees, practices from the big networks get extra payments (sometimes double) from insurers? They receive a “facility fee” that they bill as well to the uninsured and those with HSA’s. That’s an overhead fee they can bill that no independent practitioner can bill. So the guy in my office building right next door to my practice who is part of Lahey (for example) bills and gets paid about double what I do for the very same service in the very same building!
The fundamental nuttiness of the healthcare industry
compared to any other is in full glory here. The
economics, on all sides (patient/payer/provider) have
been so yanked with that nothing makes sense anymore.
The AMC issue just highlights this…
Explain to me why it is that the bigger the delivery
system gets, the more they can extract from the
payers? Yet the bigger the payer, the more they have
to pay (yes, this is true)? I’ll bet BCBSMA isn’t
paying much lower (if at all) rates to Partners
than HPHC or Tufts. That’s the equivalent of a
product supplier dictating to Wal-Mart what price they
should get. If a payer’s too small, the provider
won’t negotiate, and if they’re too big, well, then you
might put the hospital out of business (hey hospitals,
you could try and actually innovate and compete, just
like every other industry). Where oh where did the
basic principles of capitalism run off to when it
comes to healthcare? (don’t answer that – the payers
are a victim of their own system – I know that)