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Moment of truth for Massachusetts health care cost control

Posted by John McDonough  February 19, 2014 10:45 PM

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Today the state's new Health Policy Commission (HPC) voted 9-0 to approve a report recommending that Partners Healthcare's proposed acquisition of South Shore Hospital not proceed. Though the HPC does not have authority to stop the acquisition, MA Attorney General Martha Coakley and officials from the Federal Trade Commission have been waiting for this report before making their own moves. If they follow through on the HPC recommendation, it will be the most dramatic and significant intervention in the Massachusetts health care marketplace by government since the state deregulated hospital finance controls back in 1991, 23 years ago.

Love it or hate it, this is big stuff, make no mistake.

Honestly, I recommend that you read the whole 123-page report, which includes Partners' dissent, as well as today's HPC response. I started by reading Partners' dissent and confess to being impressed by their arguments. Didn't last. The HPC analysis is impressive and solid, and their retort to the Partners' objections -- along with statements from three independent consultants -- is pretty devastating.

HPC bottom lines: Partners and South Shore are the most expensive providers in their respective markets. If South Shore joins Partners, especially its physician network, it's a big payday for the South Shore physicians. It will diminish competition and push up health care costs higher for consumers and employers than would happen without the deal. Partners says they will employ new and sophisticated Population Health Management approaches and tools to reduce costs more than they would go up, a claim that the HPC pretty well demolishes.

Like everyone on the HPC and in lots of other places, I have friends in high places at Partners, people for whom I have mighty respect. I think Partners is a great organization and highly important to Massachusetts. And, based on the HPC report, I think this merger is wrong for Massachusetts.

Here are some important things to watch going forward:

First, in 2012, Governor Deval Patrick and the Legislature created the HPC to make these politically difficult findings. During the process in 2012 in creating the HPC, the House of Reps wanted to give HPC regulatory authority, and the Senate demurred, only wanting to give them the mandate to consider and the power of the pen. I'm now happy the Senate won. It was smart design. The HPC has done the hard analysis, and now it's up to others to act. On their first hard decision, the HPC acted with integrity and smarts. Congrats to the members and staff for a job well done.

Second, now this is in the hands of Attorney General Martha Coakley who, in recent years, has produced tough reports on the Massachusetts health care market that have targeted Partners, among others, as a key reason for the high cost of health care in our state. Now, it's show time for the AG who is also a Democratic candidate for governor in September. Tough choice for her -- and lots of folks will be watching.

Third, let's see if any of the other gubernatorial candidates step into this and try to make this a gubernatorial campaign issue. Charlie Baker, Steve Grossman, Don Berwick -- come on down! You can dance, you can run, but you can't hide. None of this: on the one hand, on the other hand, will do. The HPC has put it out in black and white. Which side are you on?

Fourth, when is the last time we saw the federal government step into a health care market issue in Massachusetts, or anywhere? Not too often. And the Federal Trade Commission is looking at this one. Will they step in or not? And how will that impact the behavior of the other players?

Fifth, have some sympathy for Partners, not too much, just some. My impression of the big players is that they are always more keenly sensitive to their vulnerabilities than to their strengths, including Partners. They are worried about the growing strengths of their rivals, and keenly aware of how much a target they are because of their prices and reserves. If they got too big and too strong for this market, it's past passive state regulators who deserve the blame.

Finally, if the Health Policy Commission had swung and missed on this one, it would have been game over on this new era of health care cost control in Massachusetts. And for all the drama of this episode, it's really just spring training for what's to come when the growth in health care costs begins to exceed the state-mandated targets set in the 2012 law. In its first controversy, the HPC shows that it's for real.

I don't know where this controversy will come out. It's really worth watching.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About the author

John E. McDonough is a professor of practice at the Harvard School of Public Health. He is the author of the book “Inside National Health Reform”, published in 2011 by More »

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