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.