I have been amused by the misdirection of both parties that Partners Healthcare System views Steward Health Care System as competitor. I have often pointed out that such is not the case. Maybe, finally, the media will drop this mantra. In today's Boston Globe, we learn:
Expanding ties between the state’s two largest medical care providers, fast-growing Steward Health Care System has struck a deal with Partners HealthCare System to send its most severely injured patients from emergency rooms at Steward’s 10 community hospitals to Partners-owned Massachusetts General and Brigham and Women’s hospitals in Boston.
But another myth persists, even in this story:
The alliance isn’t the first between Partners hospitals — which have been cited by state Attorney General Martha Coakley as among the most expensive in Massachusetts — and two-year-old Steward, which many in the state health care industry welcomed as a lower-cost alternative.
I don't know who the "many" are, but the evidence collected by the state's Attorney General showed that the Steward (then Caritas Christi) hospitals are actually not lower cost providers than their community competitors.
And yet another myth is created. A Partners' spokesperson says:
“This provides us an opportunity to be altruistic in sharing our knowledge about treating some of the most critically sick and injured patients. . . . She noted that critical emergency care is usually labor- and technology-intensive, and that many patients don’t have commercial insurance.“Trauma is not a profit center for either the Brigham or the Mass. General. We’re not doing this for economic gain.”
Right. We could spend time parsing this, but let's keep it simple. First, incremental volume like this does not have to cover fully allocated cost to be profitable. Any contribution above direct marginal costs is profitable in this circumstance. Second, trauma patients tend to stick around for a while beyond the original diagnosis and treatment and become regular in-patients, who are profitable on both incremental and fully-allocated cost bases.
Expanding ties between the state’s two largest medical care providers, fast-growing Steward Health Care System has struck a deal with Partners HealthCare System to send its most severely injured patients from emergency rooms at Steward’s 10 community hospitals to Partners-owned Massachusetts General and Brigham and Women’s hospitals in Boston.
But another myth persists, even in this story:
The alliance isn’t the first between Partners hospitals — which have been cited by state Attorney General Martha Coakley as among the most expensive in Massachusetts — and two-year-old Steward, which many in the state health care industry welcomed as a lower-cost alternative.
I don't know who the "many" are, but the evidence collected by the state's Attorney General showed that the Steward (then Caritas Christi) hospitals are actually not lower cost providers than their community competitors.
And yet another myth is created. A Partners' spokesperson says:
“This provides us an opportunity to be altruistic in sharing our knowledge about treating some of the most critically sick and injured patients. . . . She noted that critical emergency care is usually labor- and technology-intensive, and that many patients don’t have commercial insurance.“Trauma is not a profit center for either the Brigham or the Mass. General. We’re not doing this for economic gain.”
Right. We could spend time parsing this, but let's keep it simple. First, incremental volume like this does not have to cover fully allocated cost to be profitable. Any contribution above direct marginal costs is profitable in this circumstance. Second, trauma patients tend to stick around for a while beyond the original diagnosis and treatment and become regular in-patients, who are profitable on both incremental and fully-allocated cost bases.