Speaking of…
Tuesday, November 18 2008
More news from Massachusetts: this article from the Boston Globe shows that elite hospitals charge more for care that is no better. I could have guessed as much, but it’s somehow still deeply annoying when I read about it happening.
(via Ezra Klein)
Update: I see Shadowfax has read the article, too, and has a sharp (but selective) critique. I do think he misunderstood this paragraph:
Partners’ favorable insurance contracts have helped the company to reap $1.7 billion in profits since 2004, reflecting a profit rate that is average compared with the nationally known hospitals the company considers its peers. But it’s high by Massachusetts standards: Partners collected 35 percent of statewide hospital profits last year, even though it owns only 16 percent of the beds.
This doesn’t prove that Partners’ profit rate is “average” for the hospital industry – just compared to those hospitals it considers peers, and I’m sure Partners’ picks who it considers its peer.
It is the patients’ fault that they choose to consume goods which are not worth the dollar value assigned to them. If the patients did not demand the goods for the price, the “elite” hospitals would not be able to charge the prices they do without collapsing.
Bragging rights go a long way when you can say “my doctor is over at B&W Hospital”.
Sure, patients could save money by making better-informed choices, which is why I think the article helps more than it hurts. But patients hardly ever have access to cost information a priori, much less data on efficacy. I went through this a while planning for surgery a couple years ago – it was nearly impossible.
Thanks for the link.
Yes, partners is more profitable than the average MA hospital — that is an established fact. However, if you see that I cited the Fitch data, which showed that for 2006 (the most recent year I could find) Partner’s operating margin was 2.2%, compared to 2.8% for the industry nation-wide. So I feel comfortable concluding that Partners is not more profitable than the average US hospital. I don’t know what a valid “peer group” would be to compare it to, though.
Shadowfax – The comparison to the national average would be fine, if there was reason to think that Massachusetts’s market conditions were very similar to other states’. My understanding, though, is that those conditions can vary significantly from state to state, and my sense is that Mass. is one of the tougher markets. (I looked for numbers, but couldn’t find anything specific or recent enough – so I could be way off.) You’re right – this was an insurance industry hit on Partners – but I don’t see the harm to anyone outside Mass.