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Collusion en masse - in Mass.

Posted Jan 22 2009 4:40pm

By Mike Daly

Ethics, governance, collusion: One of these things is not like the other

At the beginning of the year, Mass. Governor Deval Patrick convened a panel to examine the agreement between Blue Cross Blue Shield of Massachsetts and Partners, the umbrella organization of Massachusetts General Hospital and Brigham and Women’s Hospital, to determine whether the relationship was driving up healthcare costs, “making it harder to extend healthcare insurance to all residents.”

Although spokespersons from both BCBS of Massachusetts and Partners said they “welcome a fair and open discussion” by the panel, both had rather vague answers—and neither admitted any wrongdoing. Partners claimed there were “many factors contributing to rising healthcare costs.” I completely agree. This particular partnership is a primary one.

Partners claimed that its relationship with BCBS of Massachusetts was “ a counterforce to insurance companies that underpaid hospitals and doctors through much of the 1990s.” However, The Boston Globe found that other hospitals within the same market were not benefiting from this relationship in the slightest.

Partners hospitals are clearly better paid than others in the same market— up to 32 percent more, in fact—even though other hospitals, including my own Baystate, outperform Partners in certain quality metrics. In my last entry, I focused on the issue of being paid more based on brand equity than quality care. In this one, let’s take a look at ethics, governance, and healthcare organizations’ responsibility to the communities they serve. In the relationship between Partners and BCBS of Massachusetts, all three of these are nonexistent.

While both organizations are nationally respected organizations, this partnership boils down to a textbook example of collusion. In one swift handshake, these two firms locked out all other firms for their own mutual benefit: Partners received the biggest insurance payment increase since 1993 and Blue Cross was protected from competition. Where was the Attorney General for all of this? Even more bothersome, where are the ethics of these hospital boards to allow such a deceptive agreement? This is the type of governance that should occur in an industry which, by definition, is to help care for people? I think not.

The deal between the two firms in 2000 “ prevented insurance companies from competing on price and helped to drive up consumer prices statewide.” While CEO of Baystate, I held firmly to the belief that we were there to serve the community. In my view, we were there to do everything we could to make our community healthier (physically), even if it didn’t make our hospital healthier (fiscally). The BCBS Massachusetts/Partners deal proves detrimental to the community it ought to be serving. Rather than providing quality care, this “800 pound gorilla” is wounding patients though these increased costs.

Interestingly enough, were this a story about exemplary cost containment, this same relationship could have served as a potential national healthcare model. Instead, it’s just an expose of a bad partnership that’s akin to the attempts by Major League Baseball owners to restrict players’ salaries in the mid-1980s. What a disappointment.

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