Before I post some big news from today, I want to discuss Partner’s business practices for a minute.
The Partners Network makes vast profits almost every year. I’m sure if you lined up all the businesses based in MA that mostly deal with MA customers, Partner’s gross profits would be very near the top — and yet goes tax free, because it’s a “non-profit.” Baloney.
It’s important to understand how this works, though. Partners is so profitable because it’s so huge, and is able to use its market leverage to force insurers to pay it more than other hospitals for the same services.
Partners then uses that market leverage to
1) Price out the small community hospitals and networks.
2) Which forces those small community hospitals and networks to start looking for a bigger fish to gobble them up.
3) And then, once gobbled up by Partners, Partners will close all the community hospital’s less-profitable units whenever there’s opportunity to force people to travel into Boston where Partners can get better insurance rates.
4) Which then means many (mostly poor people) will go without core services, since not everyone can go to Boston. No doubt Partners sees this as a feature, not a bug.
5) Rinse and repeat, as the profits increase.
All tax free. The mafia would be proud.
It’s not just Partners, either. It’s Lahey and Bay State Health and several others. Partners is just the biggest fish in the biggest Massachusetts pond, but the same thing applies to other regions of the state, and other networks that have a premier hospital, where they can max out rates on less-profitable procedures.
So, with all that said, here’s today’s big news: the legislature has agreed to a Governor Baker proposal to tax hospitals by $250 million. The tax isn’t a cash grab for government — it would go straight back to hospitals, in the form of helping fund medicaid payments, and in the process help the state get additional federal matching funds (which — let’s not kid ourselves — is the real reason this all happened).
Basically, this is a Robin Hood tax on hospitals — with the rich hospitals shifting some of their profits to struggling, largely community hospitals.
There’s the big asterisk that the House leadership demanded this tax only be in effect for 5 years, thanks to the pervasive influence of the Mass Hospital Association’s lobbyist and campaign bucks in the legislature.
We’ll have to see if that 5 year promise is kept. I have my doubts that the state will be able to keep that promise, given the cost trends and importance of federal matching grants.
In any event, this is a big win today for patients, and one of the biggest things the Governor’s done so far. We should all give Governor Baker some big kudos today; he genuinely deserves it. It’s no small deal for a Republican Governor and former health insurance CEO to raise a tax, and to raise that tax on “non profit” hospitals.
It’s just a shame that we have a Democratic leadership in the legislature that’s perfectly willing to work with a Republican Governor, when for eight years they laughed away any kind of serious proposal like this from a Democrat in the Corner Office. Imagine what else we could have done.
As anyone who’s worked in a large healthcare organization knows, there are many medical professionals who are just trying to do the best for their patients. There are also the business people, with all their spreadsheets and buzzwords and marketing plans. Sometimes there are even people who fall into both groups, and that makes it difficult to sort things out unless you have been part of the system for a while (as Baker has).
Baker’s handling of the opioid crisis has already shown that he’s willing to buck various healthcare establishments if he thinks that problems aren’t getting solved fast enough.
On Partners raising rates
On Controlling Healthcare costs broadly
The first one is most germane to Rye’s original post. Partners is having a distortion on the marketplace skewing the overall costs upward to increase it’s own profits. Evan Falchuk was the only candidate for Governor last cycle not taking Partners money and to oppose it’s consolidation.
The cost control idea is not unique to the UIP, a labor group is pushing a similar ballot initiative similar to the policy proposal successfully implemented by Martin O’Malley last fall. Someday we will have a legislature willing to tackle these hard questions, until then, this ballot question is something voters should consider supporting this fall.
All this revenue is going somewhere, and it isn’t in the pockets of owners. It is non-profit.
Now, if you want to complain that Partners is top heavy and it’s executives make too much, that’s fair game. If you want to complain that the entire organization isn’t lean enough, that it’s wasteful, please do. Does Partners give away lush contracts to preferred for-profit vendors? That’s a problem. Want to complain that the effect of their actions is bad for public health? You bet, I’d love to learn about that — although, while this last one may well have something in common with organized crime, OP’s post still seems awfully hyperbolic.
Just complaining that Partners is good at the same things that many large successful businesses are good at isn’t good enough, at least not for me.
I didn’t do that. You apparently ignored or didn’t read my arguments, and then pretended they didn’t exist.
And, sure, Partners and their ilk are just doing what other corporations are doing, but health care isn’t fast food or selling iPhones. People’s actual lives do depend on this particular industry, and it therefore shouldn’t be treated like other businesses — even if it is now today, including in ways that it wasn’t even just 15 or 20 years ago.
One of the points I made that you ignored is how Partners (and others like it) have used their market clout and $$$ to make other hospitals easy pickings, and then swallow them up. When that’s what they’re doing with their money, it’s a very real issue.
And it is not only costly for patients in a macro sense, but a micro one, too — especially when some network buys a community hospital out and starts to shut down less profitable or unprofitable units over time.
Community hospitals aren’t like the GAP. If some important unit in a profitable community hospital isn’t making the big bucks that the rest of the hospital is, you don’t shut the less-profitable unit down like a Gap may shut down an adjacent Baby-Gap at a location, to funnel people 50 minutes away to the more profitable Baby Gap. Partners has done a whole lot of that, and more.
That may seem like a small issue, but it’s not to people who need those services in their communities.
Yes to all of those things. I didn’t feel like I needed to list them, because 1) my post wasn’t about them and is a diary unto itself (one that’s no doubt been written numerous times on BMG), and 2) duh!
But, certainly, Partners (and most of the other big networks) are top heavy, pay their executives too much, and — a big problem you neglect to mention – uses it’s market clout in a way that makes all of our coverage more expensive. Not lean enough? Not sure how you define that. Most hospitals are too lean when it comes to patient safety already, so if you’d like to see more nurses and doctors out the door, then no… they’re too lean already. If you’re talking about administration and executives? Absolutely! Both too many and overpaid.
They use tactics to increase their profits at the expense of other hospitals, which in turn forces the other hospitals into larger networks. They cut services for patients, while increasing their costs. They overwork their staff, forcing them to work in oppressive conditions. They have huge profit margins, hidden money in Cayman Island accounts, and vast executive pay for everyone at the top — all tax free, up until this point at least.
And all built on top of an industry that holds the lives of people in its hands, when people are in their most desperate states.
The mafia comparison isn’t all that hyperbolic at all, and I didn’t make it lightly.
Non-profit implies a charitable concern.
Here is another take on the swallowing of community hospitals that Ryan is talking about. Let’s say you need a fingernail cut. When setting rates, companies look at the 4 or 5 hospitals in an area to base their estimate of costs to charge to cover that procedure. MGH changes $500, Tufts charges $375, Brigham & Women’s charges $400. So in their premium assumption, they say it will cost $500 to cover fingernail cutting in the rates they submit to Division of Insurance (oddly, it’s always the highest one). Sometimes DOI allows it, sometimes they accept a median. But here is this Podunk Regional Hospital doing the same procedure for $175, and that drags down the reimbursement rate for everybody! BUT – if Podunk is absorbed into the fine network of MGH hospitals, voila!, their official rate becomes $500 regardless of actual costs.
And that’s just better for everyone. After all, you get what you pay for so be sure to charge a lot!
they’re sarcasm, right?
Don’t be like Tom, and be a pompous….person.