The Globe reports that a rep from Partners Health Care — which includes MGH, the Brigham and several suburban hospitals — showed up on Monday for the state hearing on health care costs. (A lot of hospitals have blown off the hearings.) Partners blamed what is known as the “cost shift” for their high prices.
David McGuire, Partners vice president for system contracting, told Division of Insurance officials that rising insurance costs are a national phenomenon, not solely a state problem caused by higher reimbursement rates paid by insurers to Partners hospitals.
Instead, he cited inadequate rates paid by Medicare and Medicaid, the government insurance programs, which increase costs for everyone else.
“We have no other way to make up these low payments than to charge more to private insurers,’’ he said.
The questions then becomes — what is adequate? Covering the reasonable cost of care or covering charges — what hospitals bills, which doesn’t always reflect how much it costs to deliver care.
Which makes it worth revisiting the Globe investigation into Partners that found:
Health insurance companies pay a handful of hospitals far more for the same work even when there is no evidence that the higher-priced care produces healthier patients. In fact, sometimes the opposite is true: Massachusetts General Hospital, for example, earns 15 percent more than Beth Israel Deaconess Medical Center for treating heart-failure patients even though government figures show that Beth Israel has for years reported lower patient death rates.
Private insurance data obtained by the Globe’s Spotlight Team show that the Brigham, Mass. General, Children’s Hospital, and a few others are, on average, paid about 15 percent to 60 percent more than their rivals by insurance companies such as Blue Cross Blue Shield of Massachusetts and Harvard Pilgrim Health Care. The gap is even more striking for many individual procedures, which can be two or three times more expensive in one hospital than in another.
This payment pattern has become a driving force in the state’s galloping healthcare costs, and it raises hard questions about why certain hospitals and physicians receive premium pay for care that is no better than that of their competitors.
- Partners cost per case falls in line with median health costs when compared with other peer hospitals recognized on the U.S. News & World Report Honor Roll. Case mix and wage adjusted Medicare cost per case among Honor Roll hospitals is $8,004. Brigham and Women’s Hospital and Massachusetts General Hospital compare at $8,130 and $7,793 respectively.
- Partners’ hospitals compete in a national market. Compared to national competitors, Partners’ operating margin is low at 1.6%. UPenn’s margin is 9.8%, Northwestern, 6.7%, and Cleveland Clinic, 6.3%.