Saturday, July 12, 2014

Oligopoly in Massachusetts

Some years ago – OK, many years ago – Ann and I attended my Harvard College 25th Reunion. The highlight was an Evening at the Pops, when we were escorted to Boston Symphony Hall en masse by the police with all roads blocked off on the way. Wow. I couldn't believe it. It was great to be among the chosen. I doubted the same treatment was extended to Boston University, nor to Brandeis. Wow.

I never liked New England much. It was the kind of place that would block off streets from ordinary citizens to honor Harvard alumni. For all the hard scrabble George Higgins books and Matt Damon movies, there was the other side of small time squalor. Big time squalor, perhaps. I did admire Boston medicine, even more so since I have left Boston, and in probably no other city would victims of a marathon bombing receive such unbelievably well thought out and well executed care. But still.

Now I have been following Paul Levy's excellent and thought provoking blog at Paul is the former CEO of the Beth Israel Deaconess Medical Center, and has a strong ethical, idealistic bent and a firm intelligence. He regularly calls attention to the ethical lapses among medical officials as they extoll the virtues of robotic surgery with their right hand and receive various favors from Intuitive Surgical Inc. with their left hand. The University of Illinois had an incredible run their in Paul's blog for a while – in the end, of course, the ensconced vested interests didn't move much, which is what happens with ensconced vested interests most of the time.

Now Paul has turned his attention to Partners Healthcare of Massachusetts, founded by Mass General and Peter Bent Brigham Hospital (whose president years ago was my good friend Jim Mongan.) Partners has been more than successful. They have formed an oligopoly of health care. There are many other providers in Massachusetts but I guess none who had the great ability to run a corporation the was Partners has done it. As a result of their success, they get terrific rates from their insurance plans – Blue Cross is predominant in Massachusetts, I think. With lots in the kitty, they are trying to expand, which is what successful companies do. They want to pick up some hospitals on the South Shore. But to do so, they need the blessing of the Massachusetts Attorney General – there is such a thing as anti-trust in Massachusetts law, and apparently the responsibility for enforcement is lodged in the office of the AG.

Unfortunately, the current AG is the redoubtable Martha Coakley, last heard from nationally as she ingloriously handed over the Kennedy senate seat to Scott Brown – that Martha Coakley, who took a vacation during the campaign, didn't she, and didn't see the point of going out and greeting workers. Now she has given Partners a free pass to expand. It was even freer until there was a tiny little outcry and she got a tiny amount of money from them to do something or other as the price of her acquiescence. Tiny. She's that kind of AG, running for Governor, God help Massachusetts. I hold a grudge, Dear Reader.

The powers that be – think police escort to the Pops – have declared that big is good. It leads to cooperation within the firm, care coordination, higher quality. They don't say it leads to lower prices, note. They say that this is just what national policy is calling for, more firms like Kaiser, Geisinger, Rocky Mountain Healthcare. One of their chiefs, arrogant as always, has declared in the past that “this is what quality costs.” He could be in the first limo headed to the Pops, I guess.

Maybe Partners does have very high quality health care, although there is no evidence that they give better care than other organizations.  Maybe they do.  But it looks much more like simple oligopoly rents.  

Government, however, can't take self-declaration as fact.  The role of government needs to be to lay out the playing field so that it is fair, and referee the game so that it is in the public interest – not like the referee in Brazil vs. Colombia, for instance, who let Brazil intimidate without correction, and look where it led. It is a hard role, because being a referee is hard. After all, your role is not to be the star, and the stars are more popular than you are. But good referees are the key to good and fair conduct. If Partners really does have something better to sell, it has to be a case that can be made for all to see and agree on, and for buyers to agree to buy what they are selling.  This case looks more like a wink and a nod among the passanoventi. (That's as close as I can spell it without a copy of The Godfather to look at.)

Unfortunately, in health care the anti-trust referees have been extremely negligent, letting hospitals merge as they will until they can price themselves as oligopolies will. It is this current tradition, and the evidence of the Coakley decision simply extends this tradition, that makes me very fearful that Accountable Care Organizations – ACOs – sponsored by Obamacare, will lead to big organizations that price-fix and don't add much quality.

Here is the link to one of the Not Running a Hospital posts that quotes yours truly:

And a later post by Paul, on the subject of quality of care at Partners:

Posted: 11 Jul 2014 02:08 PM PDT
Well, we could scarcely expect him to say something else, but the CEO of Partners Healthcare System really went out on a limb when he told the Boston Globe:

“The formation of Partners has been a great thing. Care has gotten so much better.”

Well, no, it has not.  Here's a more accurate description from Dr. Eugene Lindsey, the former head of the state's largest multi-specialty group, which has referred patients to Partners for two decades:

If the motivation of Partners over the last twenty years has been to use its market power to really integrate care and lower the cost of care, they have failed monumentally. The care within Partners is no more integrated, and certainly much more costly than in any other healthcare system in the state, the nation, on this planet, and therefore presumably anywhere in the universe. Partners offers spectacular care in specific areas at a high cost.

Partners’ performance on some of the metrics of care that is routine in the community arguably falls short from being unequivocally “the best,” although its price never reflects that reality. What it does succeed at is finance, marketing, government relations and intimidation of other members of the healthcare industry. There has never been a credible analysis that shows that Partners' care significantly exceeds in technical quality, access, patient satisfaction, patient-centeredness, or safety when compared with the other less generously paid academic medical centers in Massachusetts.

Referring to a New York Times editorial, he adds:

Given this reality and the reality that it is the most expensive provider of care in the Massachusetts healthcare market, the Times has made an egregious error to suggest that Partners has been a leader in collaborating to control costs and improve care.

Gotta be suspicious of situations where the cops are on your side, I guess.

Budd Shenkin

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