Boston Globe Spotlight Article on Costs of Hospitals With Large Contracting Leverage

The Boston Globe has a long article in today's paper on the increased costs of Partners HealthCare (Mass General and Brigham and Women's) and Children's Hospital compared to other hospitals in the Boston market.  The article cites data collected by the state's Quality and Cost Council which showed the amount paid for various procedures at different hospitals in the area.  It also cites quality data -- suggesting that the quality of MGH and BWH are not the explanation for the high prices. (There is far less quality information available about pediatric hospitals, so the issue of the relative quality of Children's is not addressed).  

A few quotes of note:

Charlie Baker (CEO of Harvard Pilgrim, a major insurer):

"There is no other sector of the economy anywhere in this country in which that kind of price variability with no appreciable difference in service or product quality can sustain itself over time."

Paul Levy (CEO of Beth Israel Deaconess Medical Center, a Partners competitor):

"Shouldn't there be some correlation between what you get paid for doing something and the quality of what you do?"

Gregory Sullivan (State Inspector General):
"Apparently, this subject is the equivalent of the third rail" explaining why the Quality and Cost Council has still not published the cost and quality data

Tom Lee (CEO of Partners Community HealthCare, Inc, and network president)

"We have the pieces of a system that are increasingly actually working together."

"There's no question in our market that people want this [access to MGH and BWH]"

FTC Conference:

"Is price a signal of quality in healthcare markets?"  "No."

The story of systems with a large amount of contracting leverage increasing unit price is similar to a WSJ article on Carilion Health, a nonprofit system in Roanoke, VA earlier this fall.  That system has substantially more market leverage than Partners has in Boston.

  It will be interesting to see what fallout there is from this article over the coming weeks.