I'm trying to know how to react to a point made by Atul Gawande in a recent talk he gave. As reported by Maggie Mahar on Health Beat:
In the past, doctors rarely focused on the cost of medical treatments. Their mandate was to do the best they could for the patient in front of them. How much that might cost society was not their concern. They were not economists. They were not politicians. They were physicians.
So when Massachusetts’ Attorney General released reports in 2010 and again in 2011, revealing enormous disparities in how much the state’s hospitals charge even for simple procedures “we were surprised,” Gawande told his breakfast audience. Gawande and his colleagues knew little about hospital pricing. They had no idea that insurers were paying their hospital far more than other, less well known hospitals, simply because Brigham had a brand name, and thus, enjoyed market clout.
Wow. Atul is as honest as anyone I know, but could it be that the sophisticated MDs at the Brigham were unaware of what everyone else in town knew?
The Boston Globe published a Spotlight series on this topic in the fall of 2008. Here are the opening paragraphs of one story:
As his patient lies waiting in an adjacent exam room, Dr. James D. Alderman watches while an assistant reaches into a white envelope and pulls out a piece of paper that will determine where the man will be treated. Big money is on the line.
If the white slip of paper directs him to do the procedure in Framingham, the insurance company will pay the hospital about $17,000, not counting the physician's fee. If Alderman is sent to Brigham and Women's Hospital in Boston, that hospital will get about $24,500 - 44 percent more - even though the patient's care will be the same in both places.
"It's the exact same doctor doing the procedure," said Andrei Soran, MetroWest's chief executive. "But the cost? It's unjustifiably higher."
Call it the best-kept secret in Massachusetts medicine: 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.
Today, the Brigham and Mass. General are paid an average of 30 percent more than similar nonpediatric hospitals statewide for each procedure, based on payment rates of Blue Cross obtained by the Spotlight Team.
Altogether, those higher rates add up to at least $800 million more for Partners hospitals and doctors than if they were paid at rates similar to competitors, based on Partners' insurance income.
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.
Another question: Did the Brigham doctors also not know that they, as physicians, were getting paid substantially more than physicians at the non-Partners academic medical centers in Boston? (This was in addition to the hospital payments.) Every other doctor in Massachusetts knew it.
In the past, doctors rarely focused on the cost of medical treatments. Their mandate was to do the best they could for the patient in front of them. How much that might cost society was not their concern. They were not economists. They were not politicians. They were physicians.
So when Massachusetts’ Attorney General released reports in 2010 and again in 2011, revealing enormous disparities in how much the state’s hospitals charge even for simple procedures “we were surprised,” Gawande told his breakfast audience. Gawande and his colleagues knew little about hospital pricing. They had no idea that insurers were paying their hospital far more than other, less well known hospitals, simply because Brigham had a brand name, and thus, enjoyed market clout.
Wow. Atul is as honest as anyone I know, but could it be that the sophisticated MDs at the Brigham were unaware of what everyone else in town knew?
The Boston Globe published a Spotlight series on this topic in the fall of 2008. Here are the opening paragraphs of one story:
As his patient lies waiting in an adjacent exam room, Dr. James D. Alderman watches while an assistant reaches into a white envelope and pulls out a piece of paper that will determine where the man will be treated. Big money is on the line.
If the white slip of paper directs him to do the procedure in Framingham, the insurance company will pay the hospital about $17,000, not counting the physician's fee. If Alderman is sent to Brigham and Women's Hospital in Boston, that hospital will get about $24,500 - 44 percent more - even though the patient's care will be the same in both places.
"It's the exact same doctor doing the procedure," said Andrei Soran, MetroWest's chief executive. "But the cost? It's unjustifiably higher."
Call it the best-kept secret in Massachusetts medicine: 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.
Today, the Brigham and Mass. General are paid an average of 30 percent more than similar nonpediatric hospitals statewide for each procedure, based on payment rates of Blue Cross obtained by the Spotlight Team.
Altogether, those higher rates add up to at least $800 million more for Partners hospitals and doctors than if they were paid at rates similar to competitors, based on Partners' insurance income.
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.
Another question: Did the Brigham doctors also not know that they, as physicians, were getting paid substantially more than physicians at the non-Partners academic medical centers in Boston? (This was in addition to the hospital payments.) Every other doctor in Massachusetts knew it.