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..

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