Monopoly and Medical Care

In every industry as a firm gets larger and conglomerates, it explains to regulators that its size will redound to the benefit of consumers, as they will be able to offer new services, etc.  Usually, it is bull-diggy.  Who wouldn't want a monopoly?

Paul Levy writes a very interesting blog called "Not Running a Hospital."  It used to be called "Running a Hospital" when he was CEO of Beth Israel Deaconess, a Harvard hospital, and he renamed it when he left his job.  Before I discovered this blog, I had heard of him from some Teaching Company tapes on Leadership - how he came into a dysfunctional Board at the Beth Israel and laid down the rules and turned the institution around.

Anyway, here is his latest blog and my response:

Self-dealing between a health system and its insurance company

Posted: 13 Sep 2013 06:22 AM PDT

Just when you think you've seen the limits of market power, creativity emerges.  Julie Donnelly at the Boston Business Journal reports:

Partners HealthCare aims to drive new members to its newly acquired health insurer, Neighborhood Health Plan, by cutting off access to some doctors within new health plans offered under ObamaCare.

Neighborhood Health Plan is one of 10 insurers that has been certified to offer subsidized and un-subsidized ObamaCare plans through the state’s Health Connector.

But what Neighborhood Health Plan has is exclusive access to primary-care doctors at Brigham and Women’s Hospital and Massachusetts General Hospital.

Now that Partners, the parent organization of the Brigham and Mass General, owns a piece of the insurance pie, they have decided to offer access to their primary care doctors only to those members who choose Neighborhood Health Plan.

This is likely to drive new business to Neighborhood Health Plan from Boston-area patients who want to keep or begin a relationship with a primary-care doctor at one of the two most prestigious hospitals in the state.
 
This is a departure from Partners’ strategy in the past. Before its purchase of Neighborhood Health Plan, Partners’ offered access to its doctors to all of the health plans within the state-subsidized health plans that were launched under Massachusetts' own statewide health reform.

And I wrote in rsponse:

Paul, this new thrust by Partners' seems really important. 

I get how pissed off you are at them, probably buttressed by a holier-than-thou sanctimonious and hypocritical attitude -- I was at HMS, so I get that.  

But I'm wondering how this fits in with Kaiser?  And maybe Apple -- closed networks, both. And ACO's.  All talk about the importance of integration - the Oliver Williamson (Nobel Prize, economics) idea that incorporating functions within one company can be more efficient than a market.  Don't get me wrong, I'm with you in smelling monopoly, and as a former primary care doctor with an independent company, I never wanted to be incorporated and thus controlled by an exclusive relationship with a single payer.  I thought it was better for patients, and better for our practice, for us to be independent and have multiple avenues of ingress for patients.  And I had no question that an exclusive relationship would spell decreased payments for us in primary care.

But the ultimate problem with our current medical care system is hospitals and hospital costs.  Kaiser cuts them down because everyone there benefits from decreased hospital costs.  Although they are unionized, and that's a problem.  (Interestingly, when you go into an exam room, the medical assistant is wearing a large, prominent pin that says SEIU!!)  So one could say that to get control of the system they need a completely integrated company.  In this case, of course, one could say that it is not a small upstart company competing with the behemoths, but the latter solidifying their position.  In that case, we rely on government and anti-trust, but we know that's not going to work at this stage of the game. 

Anyway, I would encourage you to keep writing about this, as deep as possible.

Budd Shenkin