First, it was Charlie Baker in his blog (click here ) talking frankly about the difficulties in this market dealing with the seemingly insatiable desire for and power of academic medical centers (aka: Partners) — and a fascinating follow up dialogue, now up to 38 comments. Now it’s Paul Levy in his blog posting (click here) today wondering — if Charlie is correct — why it’s worth bothering to compete on better quality and value. Money quote:
So, here is the question. Since BIDMC has and will continue to have an excellent clinical reputation and very good relationships with community hospitals, multi-specialty groups, and other referring physicians, should we abandon our call for structural changes in the payment system? Would we be better off just living with the current arrangement, i.e., receiving rates that are just below those provided to the dominant provider network? Sure, we would never catch up with them in terms of earnings potential, but we would do better than most hospitals in the region. As consolidation and closures continued in the state, we would inherit a share of the clinical volume that will be passed along.
First, this is fascinating stuff. A new kind of public discussion — formerly held behind the scenes in senior management and board meetings — is coming out in public through these blog sites. Great stuff, so keep it up.
Second, if I can read between the lines of what Paul really wants, it’s … insurers, pay me more for the great quality work we’re doing. Yes/no? Implication — Beth Israel (and others) are getting underpaid in comparison with Partners, and it’s not fair. Just for the heck of it, I went to the hospital financial reports website at the state’s Division of Healthcare Finance and Policy. I looked up data on BIDMC, Mass. General, and Brigham & Womens. Here’s what I found:
Total Surplus FY02/FY06
Total Net Assets FY02/FY06
BIDMC
-$8.4M/$64.6M
$280M/$484M
Brigham & Women’s
$22.8M/$68M
$460M/$494M
Mass. General
$48.8M/$294M
$1.4B/$1.18B
Yes, BIDMC’s major competitors are bigger and badder. Doesn’t seem, though, that BIDMC is doing too shabbily itself. Doesn’t seem like it’s time to take the hankies out.
So I’m left wondering, what are the “structural changes in the payment system” Paul wants to see? Paying for quality sounds like a promising idea. But there are literally hundreds and hundreds of quality indicators, and each provider would like to get paid for those things it does well, and not get penalized for the things it does poorly. Who should decide which indicators matter, and which do not? Given the recent negative evidence on “pay for performance,” how does this get decided? And, in a market where government stays out of payment negotiations between providers and payers, how do you really eliminate the impact of market share?
I don’t want to discourage the conversation. I would like to see it move to the next level. Let’s get specific…
John McDonough
oh yeah, one more thing Are you interested in my frequent comment I have a nice fresh joke for you people) How do crazy people go through the forest? They take the psycho path.
I can’ resist pointing out that the big rich medical centers and their networks of providers are all too eager to be paid on the basis of quality indicators because they have the funds and technology to show how excellent their quality happens to be.
Small community hospitals and small practices, along with some rural hospitals in low income areas either cannot afford to provide the needed information, or the amount of extra payment doesn’t cover the cost of doing the research, or if they are already at lower quality because of lack of resources, they will end up being even worse off by comparison. Not everybody lives or gets health care in Boston.
Paul:
We may just need to walk and chew gum at the same time. We need to measure and improve quality in every way possible. And it’s also quite possible that if we do everything feasible on quality, we may still not get a handle on out-of-control costs because other factors (i.e.: market power) have more influence.
We may just need to do both — get quality right and have some sensible, reasonable price regulation on the system.
John
Re quality measurements, the bottom line is, ya gotta start somewhere. If the insurance companies took the lead and used their data to try to measure value (outcomes per dollar spent), even if it’s just a pilot project in, say, your state of MA; you can bet the providers would scramble to get THEIR value measurements going and things would start to happen. Right now everybody’s sitting around talking and waiting for someone else to do something – e.g., the govt and politicians, which is like watching paint dry.
John,
Thanks for picking this up.
I am a bit surprised that you seem to be advocating a move away from trying to measure quality and applying it to insurance payments — mainly because it is difficult to figure out which things to measure. That doesn’t seem consistent with your previous strong advocacy for high quality medical care. If someone’s payments are not tied to these goals, why would they give it the kind of extra attention you would hope for. Am I misunderstanding your point?
As for specifics, no, I don’t have them right now. It takes at least two to tango on this front.
Fascinating. I wonder how much uncompensated care (at average insurer reimbursement rates and net of any government payments intended to offset the cost of such care) each hospital provided to justify its tax exemption.