Saturday, December 13, 2008
Academic Medical Centers and Dinosaurs
What if people come to believe that the health care services provided by their local community hospitals are better and less expensive than same services provided at big academic medical centers?
That possibility is being posed by a flap now going on in Massachusetts about how hospitals get paid.
It seems that Massachusetts Blue Cross and other insurance companies are paying premium rates to Partners and to Boston Children’s Hospital, both Harvard affiliated and generally perceived to be the crème de la crème of Boston medical institutions. Everybody in the area wants to be able to use them if the need arises, which the institutions use to their advantage during contract negotiations with insurance companies. The Boston Globe recently did an article on the subject (State urged to review fees to elite hospitals, November 20, 2008) and reported that the amount of the premium ranged from 15% to 60%. In other words, for the same medical treatments, Partners and Children’s get paid 15% to 60% more than other hospitals in the area.
The premium rates are based on the implicit assumption that the care is better. Quality is now being measured, however, and it turns out that the assumption isn’t valid. Data now available indicates that for the “ordinary cases” that constitute the vast majority of patients in these venerated institutions, the care provided by community hospitals is just as good – sometimes better.
The Globe article dealt with the economic implications of this, suggesting that paying a premium for care that is no better adds to the cost of care unnecessarily.
I’d like to raise an even bigger issue.
If people become convinced that the care provided in their local hospitals is just as good as that in the big academic medical centers, why would they pay more for the right to get that care in the more remote, more expensive place?
And if they wouldn’t, would that eventually turn those huge institutions in their present form into the dinosaurs of health care – great during their day but of a bygone era?
What if people come to believe that the health care services provided by their local community hospitals are better and less expensive than same services provided at big academic medical centers?
That possibility is being posed by a flap now going on in Massachusetts about how hospitals get paid.
It seems that Massachusetts Blue Cross and other insurance companies are paying premium rates to Partners and to Boston Children’s Hospital, both Harvard affiliated and generally perceived to be the crème de la crème of Boston medical institutions. Everybody in the area wants to be able to use them if the need arises, which the institutions use to their advantage during contract negotiations with insurance companies. The Boston Globe recently did an article on the subject (State urged to review fees to elite hospitals, November 20, 2008) and reported that the amount of the premium ranged from 15% to 60%. In other words, for the same medical treatments, Partners and Children’s get paid 15% to 60% more than other hospitals in the area.
The premium rates are based on the implicit assumption that the care is better. Quality is now being measured, however, and it turns out that the assumption isn’t valid. Data now available indicates that for the “ordinary cases” that constitute the vast majority of patients in these venerated institutions, the care provided by community hospitals is just as good – sometimes better.
The Globe article dealt with the economic implications of this, suggesting that paying a premium for care that is no better adds to the cost of care unnecessarily.
I’d like to raise an even bigger issue.
If people become convinced that the care provided in their local hospitals is just as good as that in the big academic medical centers, why would they pay more for the right to get that care in the more remote, more expensive place?
And if they wouldn’t, would that eventually turn those huge institutions in their present form into the dinosaurs of health care – great during their day but of a bygone era?
