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Sunday, May 02, 2010

Breaking Up Partners

The Massachusetts General Hospital and Brigham and Women’s Hospital, both Harvard affiliated, are the health care power houses of Boston. In 1994 they merged to become Partners HealthCare.

In the Boston area, it is very difficult to sell a health insurance policy that does not cover services from MGH and the Brigham, which are thought of as being at the pinnacle of modern medicine. However, it might be possible to sell a policy that provided access to one of them, thus giving insurance companies the possibility of bargaining for terms by playing them off against each other.

The threat of that happening is the factor commonly given credit for the two proud, renowned, and fiercely independent hospitals deciding to merge. It is not what the hospitals said at the time, but is what most knowledgeable people believe.

If that supposition is correct, the strategy worked magnificently – not only in preventing competition, but in creating a healthcare juggernaut so formidable that it has been able to extract premium payment rates from health insurance companies doing business in Massachusetts. There being quite active competition among those companies, and Partners being a provider each must have in order to sell insurance, Partners has been able to demand and get that premium.

Now that Massachusetts has gone for universal coverage, cost is becoming an issue. The premium payments being extracted by Partners from insurance companies have been featured recently in several stories in The Boston Globe with the implication that those payments are contributing to the cost problem.

Now the feds are getting interested. The April 29t issue of The Boston Globe reported that the US Department of Justice has requested information and documents from Partners on “contracting and other practices in health care markets in Eastern Massachusetts” – in effect opening an anti-trust investigation.

The merger that created Partners has quite clearly contributed to the high cost of health care in Massachusetts. It should never have been allowed to happen and ought to be undone.

MGH and the Brigham are remarkable institutions. The concentration of raw brainpower within each of them is unsurpassed anywhere in the medical world. If competition between them caused only a fraction of that talent to be devoted to finding better and less expensive ways to provide health care, one can imagine a flood of innovation that would spread throughout the country and the world at large.

If the Obama administration were to break up Partners, the contribution to health care reform in America could be larger than that of the entire 2,000 page reform bill recently enacted.

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