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.


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