BUwonks: Venture capitalists + higher prices won’t stabilize hospitals

Alan Sager and Deborah Socolar of  BU School of Public Health study the hospital industry. In the letters page of the Globe, they point out that Massachusetts pays”  hospitals about $22 billion. That’s $3,400 per citizen, 55 percent above the national average.

They don’t think the pending Caritas sale will help fix that.

Combining many small money-losing hospitals into one big money-losing chain doesn’t save money. Still, Caritas promises savings by waving the magic wand of “economies of scale’’ (“Caritas looks to buy R.I. hospital,’’).

Partners talked this way years ago. But that merger made money through higher prices, not lower costs. If Caritas combines with other hospitals, will it use its new power to demand higher prices and threaten to close if payers don’t agree? Will it grow too big to be allowed to fail?

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