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Thursday, April 14, 2022

Health Care Reform Articles - April 14, 2022

 The US Healthcare System in Comparative View
 
                                                                    Testimony of Professor Jeffrey D. Sachs
                                                                    University Professor, Columbia University
 
                                                                    House Oversight and Reform Committee
                                                 Hearing on “Examining Pathways to Universal Health Coverage”
                                                                                       March 29, 2022
 
The US healthcare system is dysfunctional compared with our peer nations (other high-income democracies). The US system is far more expensive (per person and as a share of GDP) than peer countries. The US health outcomes are far worse. Life expectancy in the US lags several years behind our peer nations.  In the US, life expectancy stagnated between 2012 and 2019 at 78.8 years, whereas in the European Union, life expectancy rose from 80.2 years in 2012 to 81.3 years in 2019. (1)
 
The Commonwealth Fund has recently offered a detailed comparison of the healthcare systems of the US and 10 peer (comparison) countries: Australia, Canada, France, Germany, Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom. (2)  I will also use these ten countries as the sample of peer countries in my testimony.
 
Some Congressmen claim that there are no true peer countries because the US is larger than the other countries and more diverse. For that reason, it is useful to compare the US healthcare system not only with individual countries, but with the European Union (EU) as a whole.(3) Both the US and EU are diverse, with richer and poorer regions.  Yet the EU nations share basic healthcare principles that are far more effective than those of the US.  As a result, the EU healthcare system overall is fairer, less expensive, and with comparable or superior outcomes to the US.      
 
There are three basic questions about the design of a healthcare system:
 
(1) Who is covered?
(2) Who pays?
(3) Who sets the prices?
 
The basic difference of the US and the peer countries (and EU as a whole) is summarized in Table 1.  These are statements of general principle, with variation among the individual countries. 
 
 
 
Table 1.  Basic Differences in Healthcare Systems between the US and Peer Countries

 Who is Covered?Who Pays?Who Sets Healthcare Prices?Outcomes
USPartial CoverageHalf public payer, half private payerMostly unregulatedHigh cost, many people uninsured or underinsured, health debts and bankruptcy, falling life expectancy
Peer CountriesUniversal CoverageMostly public payer, through a combination of government transfers and mandatory social insuranceRegulated by governmentModerate cost, universal coverage, little or no health debt, rising life expectancy
 
The peer systems can be described as Universal, Public-Payer, and Price-Regulated.  They are not systems of socialized medicine, with the exception of the UK National Health Service, which is state-run.  In the other countries, healthcare providers are (mostly) non-governmental health professionals such as private doctors, private group practices, and not-for-profit hospitals. The difference between these peer countries and the US is that the peer healthcare workers are remunerated mostly by public funds, whereas in the US, public and private funding are each around half of the total. 
 
Public funding in Europe takes two main forms. In the Nordic countries, the UK, and some others, funding comes out of general government revenues.  In France, Germany, the Netherlands, and Switzerland, funding comes from compulsory social contributions, often paid to private, regulated insurers.  In all of the peer countries, private health providers face government regulated prices aimed at keeping drug prices and other healthcare costs under control.  The specific coverage of these regulated prices varies across countries.   
 
The most important comparisons are shown in Figures 1 and 2 and Table 2, taken from the most recent Commonwealth Fund comparison report and Our World in Data.  The US spends by far the most on healthcare of any of the 11 countries (Figure 1).  As of 2019, health spending in the US was nearly 18% of GDP, compared with 10-12% of GDP in the peer countries.  In dollars per capita, the US spending in 2019 was around $10,000 per capita, compared with roughly $4,000 - $7,000 in the peer countries.  In 2020, the first year of the pandemic, US national health expenditures rose to nearly 20% of GDP, more than $12,000 per capita.

 
Figure 1. Health Care Spending as a Percentage of GDP, 1980–2019. Notes: Current expenditures on health. Based on System of Health Accounts methodology, with some differences between country methodologies. GDP refers to gross domestic product.
* 2019 data are provisional or estimated for Australia, Canada, and New Zealand.
Data: OECD Health Data, July 2021.
Source: Eric C. Schneider et al, Commonwealth Fund, “Mirror, Mirror 2021, Reflecting Poorly: Healthcare in the United States Compared to Other High-Income Countries,” August 2021.
 
Despite these far higher outlays, the US health outcomes are generally comparable or worse than in the peer countries.  Life expectancy in the US was 78.9 years in the 2019, while in the peer countries, it was in most cases between 81 and 84 years (Figure 2).  The Commonwealth Fund assesses the US to rank last (in 11th place of the 11 countries) in overall health system performance, with a last place in four of the five categories: access to care, administrative efficiency, equity, and healthcare outcomes (Table 2).    
 

Figure 2. Life expectancy, 1990-2019. Source: Riley (2005), Clio Infra (2015), and UN Population Division (2019). Max Roser, Esteban Ortiz-Ospina and Hannah Ritchie (2013) - "Life Expectancy". Published online at OurWorldInData.org. Retrieved from: 'https://ourworldindata.org/life-expectancy'
 

Table 2. Health Care System Performance Rankings. Data: Commonwealth Fund analysis. Source: Eric C. Schneider et al, Commonwealth Fund, “Mirror, Mirror 2021, Reflecting Poorly: Healthcare in the United States Compared to Other High-Income Countries,” August 2021.
 
Why are healthcare costs sky-high in the US? Voluminous evidence shows that this is due mainly to very high costs of procedures, drugs, and hospital days in the US; in short, to the unregulated pricing of health services. (4) US healthcare providers have enormous market power in their respective catchment areas, with very few providers.(5) Pharmaceutical companies have market power due to patent protection. As a result, healthcare providers and pharmaceutical companies are able to set prices far above marginal production costs. 
 
The drug companies are notorious for price gouging. An infamous recent example was Gilead’s pricing of Sofosbuvir, a drug that the company purchased from the inventor and then marketed at roughly 1000X times the marginal cost, thereby prolonging the US epidemic of Hepatitis C.  The company got rich, while US military veterans suffering from Hepatitis C got liver failure.  Such price gouging is defended in the name of “innovation,” but this is overly simplistic.  Sofosbuvir was developed by academic researchers, and then purchased by Gilead. 
 
Consider also Moderna’s lifesaving Covid-19 mRNA vaccine.  The NIH funded the basic science of mRNA vaccines for more than a decade, much of which was in partnership with Moderna. Moderna (and BioNTech-Pfizer) walked away with the profits of the mRNA vaccines, while the US government has bought the vaccines at commercial prices.    
 
The high prices of healthcare and pharmaceuticals translates into soaring profits and wealth of the healthcare industry.  Figure 3 is from a Wall Street Journal report on CEO compensation of large pharmaceutical companies.  Note that compensation runs in the tens of millions of dollars, simply staggering sums.  Figure 4 reports the salaries of hospital administrators of major not-for-profit hospitals. The salaries are astounding: several million dollars per year.
 

Figure 3. Highest-Paid Pharmaceutical CEOs. Source: Wall Street Journal, 2019. Note: Industry groups defined by Standard & Poor's. Shareholder return reflects 1-year total shareholder return through the month-end closest to each company's fiscal-year end. 
Data from: MyLogIQ LLC (pay); Institutional Shareholder Services (performance). [Accessed March 29, 2022: https://graphics.wsj.com/table/CEOPAY_slice_Pharma_0606
Figure 4. Top 10 Non-Profit Hospitals (2016-2017). Andrzejewski, Adam et al. “Top 82 US Non-Profit Hospitals: Quantifying Government Payments and Financial Assets.” Open The Books Oversight Report. June 2019. https://www.openthebooks.com/top-82-us-non-profit-hospitals-quantifying-government-payments-and-financial-assets--open-the-books-oversight-report/
 
Figure 5 shows in simple terms that the high-profits also show up in high stock-market returns. 
The S&P 500 health sector enjoyed annualized returns of 13% over the past 10 years, the third highest sector, lagging only behind IT and discretionary consumer products. 

Figure 5. Annualized Equity Returns by Sector (S&P 500). Source: S&P Dow Jones Indices. “S&P Sectors: US Equity.” Last updated February 28, 2022. [Accessed 20 March 2022: https://www.spglobal.com/spdji/en/index-family/equity/us-equity/sp-sectors/#overview]
 
Another source of high healthcare prices in the US are extremely high administrative costs.  As shown in Figure 6, administrative costs among private health insurers averages around 13% of total outlays, compared with around 3% for Medicare.  According to the OECD estimates in Figure 7, the US spends around 1.4 percent of GDP, roughly $300 billion a year on administrative costs, while our peer countries spend less than half of that share of GDP.
 

Figure 6. Uses of Premium Revenues in Fully Insured Markets, 2010 to 2012. Data from: Congressional Budget Office, using 2010 filings of the Supplemental Health Care Exhibit (National Association of Insurance Commissioners) and 2011 and 2012 filings of the Medical Loss Ratio Annual Reporting Form (Centers for Medicare & Medicaid Services). Source: Burns A, Ellis P, et al. “Private Health Insurance Premiums and Federal Policy,” Congress of the United States Congressional Budget Office Report, February 2016. www.cbo.gov/publication/51130
 

Figure 7. Governance and Administrative Costs as Percent of GDP. Source: OECD. https://data.oecd.org/health.htm
 
Shifting to a Universal, Public-Payer, and Price-Regulated system, as in our peer countries, would save a fortune for Americans.  Congressional opponents of public-payer system claim that such a move would be “unaffordable,” and often cite a 2018 study by Charles Blahous for the the libertarian-leaning Mercatus Center at George Mason University to that effect.(6) The Mercatus Foundation projected that a move to Medicare-for-All (M4A) would add an extra $32.6 trillion over 10 years (2022-2031) to the federal budget compared with the current baseline.  Yet the Mercatus study also estimated that non-federal outlays, mainly private outlays, would decline by $34.7 trillion over 10-years, for a net saving in overall health outlays equal to $2.1 trillion. This is summarized in Table 3 (data are in $ trillions).  In other words, households would save more by eliminating out-of-pocket payments and private health insurance premia than the government would raise in revenues to fund the public system. The public system would be cheaper for the nation, not more expensive.
 
Table 3. Net Cost Savings Of $2 Trillion in Mercatus Foundation Study


There are two more key facts to drive home this crucial point.  First, the increased government revenues would presumably be raised through progressive taxation, i.e., from higher-income taxpayers. The working-class households would therefore save twice, first in the reduction of overall health outlays, and second in the shift of financing towards higher-income households. 
 
Second, and at least as important, the overall cost saving should be much more than $2 trillion over ten years (though $2 trillion in saving over ten years is nothing to ignore).  The shift to M4A should include price regulation, as in every peer country.  The US now spends around 20% of GDP on health outlays, while our peer countries spend 10-12% of GDP because of lower unit costs.  The US healthcare costs under M4A might not fall all the way from 20% of GDP to 12% of GDP, but it is reasonable to think that the US could get health costs down to 15% of GDP, higher than in the peer countries, but far lower than today.  The savings would be then be around 5% of GDP, more than $1.1 trillion at the projected 2022 GDP of $23.7 trillion.
 
These are simply illustrative numbers. The actual saving would be determined by the detailed operation of the new system. The most important determinant of saving would be the pricing regulations introduced into M4A.    
 
Note that the single-state experiments in public financing, such as in Vermont, tell us very little about what would happen in a federal M4A system.  A state like Vermont is a “price taker” of the exorbitant US healthcare costs.  Vermont by itself can’t lower these costs through regulation, because healthcare providers and pharmaceutical companies would shift operations out of Vermont. Yet in a federal system, the health providers and drug companies could not shift operations outside of the US, since those overseas markets are already tightly regulated. 
 
It behooves us to ask why the US sticks with such a miserably broken and unfair system, one that is literally killing and bankrupting Americans.  The answer, alas, is the political power of the healthcare lobby.  As shown in Figure 8, using data from OpenSecrets.Org, the healthcare sector is the number 1 economic sector in lobbying outlays, having spent an extraordinary $10 billion on lobbying outlays during the period 1998-2021. The industry is also an extraordinary campaign funder.  In the 2019-2020 federal election cycle, health-sector PACs gave $49.2 million in campaign spending, divided roughly equally between Democrats and Republicans.(7)    
 
       
Figure 8. Lobbying by Industry ($billion), 1998-2021. Based on data released by the Federal Election Commission on March 22, 2021. Source: OpenSecrets.org [Accessed March 29, 2022: https://www.opensecrets.org/political-action-committees-pacs/industry-detail/H/2020]
 
 
(2) Commonwealth Fund, “Mirror, Mirror 2021, Reflecting Poorly: Healthcare in the United States Compared to Other High-Income Countries,” August 2021
(3) The US and the EU are of roughly comparable size.  The US has a population of 332 million; the EU, 447 million.  The US GDP in 2021 was $23 trillion; in the EU, $17 trillion. 
(4) See Barber SL, Lorenzoni L, and Ong P. “Price setting and price regulation in health care: lessons for advancing Universal Health Coverage,” World Health Organization and the Organisation for Economic Co-operation and Development, 2019.
(5) Lin, L and Mrkaic M. “U.S. Healthcare: A Story of Rising Market Power, Barriers to Entry, and Supply Constraints,” International Monetary Fund, 2021, 55 p. https://doi.org/10.5089/9781513585451.001
(6) Blahous, Charles, “The Costs of a National Single Health-Payer System,” Mercatus Working Paper, July 2018
(7) See https://www.opensecrets.org/political-action-committees-pacs/industry-detail/H/2020
 
 

Health care providers say Anthem billing problems are widespread

Maine is investigating the health insurer following complaints from medical associations about underpayment, payment delays and denied claims. 

by Peter McGuire - Portland Press Herald - April 9, 2022

Underpayments, unpaid claims and other billing complications are a chronic problem for independent health care providers using the Anthem insurance network, Maine doctors and professional associations say.

The medical providers echo some of the frustrations expressed by MaineHealth, the state’s largest hospital network, which stunned many this week when it announced that its flagship hospital, Maine Medical Center in Portland, would leave the Anthem network in January.

Problems faced by individual providers stretch back years but have multiplied since last summer, said Dr. Jeffrey Barkin, a psychiatrist and president of the Maine Medical Association.

Common issues include underpaying claims and a high proportion of denied claims, Barkin said. Recently, providers ran into problems because Anthem could not recognize their national identification numbers. When people try to fix the problems, Anthem’s customer service is difficult to reach or unavailable, the providers said.

The problem has led some clinicians to stop accepting Anthem insurance and the Maine Bureau of Insurance is investigating the corporation’s conduct in the state.

“The Maine Medical Association would like to see a harmonious relationship between providers and payers, but this sort of behavior directed toward hospitals, toward doctors, has absolutely no place in the health care ecosystem,” Barkin said.

In a statement on Friday, Anthem said it strives to pay claims as efficiently and quickly as possible in accordance with contracts it has with providers. Over the last year, the insurer processed 92 percent of claims within 14 days and 98 percent of claims within 30 days, said Stephanie DuBois, director of public relations for Anthem Blue Cross and Blue Shield in Maine.

Anthem set up a dedicated Maine provider assistance team to deal with the issues, DuBois added. The company did not answer directly when asked if there were widespread billing problems in Maine and why the company is unable to pay Maine providers on time.

“We’re proud of our progress, but these are complex issues that take time to address properly and we are committed to resolving them,” DuBois said. “We have communicated our progress to providers across Maine, and we will continue that direct dialogue as we continue to resolve these challenges.”

Maine Medical Center, the state’s largest hospital, will leave the Anthem insurance network in January because of its payment practices, according to Wednesday’s announcement by MaineHealth, the hospital’s parent organization. The breakup would mean patients with Anthem insurance would have to pay dramatically higher out-of-pocket costs for care at Maine Med, which would become an out-of-network provider.

In its announcement, MaineHealth said Anthem has underpaid the Portland hospital’s claims by $13 million and owes $70 million to the entire hospital network, which includes eight hospitals in Maine and one in New Hampshire. Anthem responded by accusing Maine Medical Center of overbilling for anesthesia and operating room services.

BILLING PROBLEMS WIDESPREAD

These are familiar and frustrating issues for many small practices around the state. Anthem’s billing problems have affected therapists, chiropractors, opticians, ophthalmologists and others, according to professional associations.

Lev Myerowitz, a chiropractor in Cape Elizabeth, said Anthem owes him hundreds of thousands of dollars, including from COVID-19 tests provided in 2020.

“First it was miscoding, then a software billing issue. I think they have run out of excuses. It is pretty obvious this is a clear, companywide approach,” Myerowitz said.

“I am not the only office,” he added. “This is across the state. Small businesses have absolutely zero ability to negotiate with large insurance. We have to choose to be in-network and accept the terms provided or not be in-network. To leave Anthem as a provider would be the same as not taking insurance completely.”

Last month, groups that included the Maine chapter of the National Association of Social Workers convened a meeting between about 100 providers and Anthem executives to address the problem, said Chris McLaughlin, the association’s executive director.

“To their credit, Anthem has dedicated some staff resources specifically to Maine to help sort through challenges. For some people it felt too little, too late. Some folks have made the decision to leave the Anthem network,” McLaughlin said.

LEAVING NETWORK IS RISKY

Leaving the network can be risky for providers and patients. The Indianapolis corporation covers 54 percent of insured Mainers and is one of the biggest health insurance companies in the U.S. If doctors, therapists and others stop taking the insurance, they could lose clients or force them to pay higher out-of-pocket costs.

“We don’t know the scale of the exodus,” McLaughlin said. “We heard from a lot of social work professionals that they feel compelled to suck this up and deal with it on behalf of their clients so they don’t lose services.”

Professional associations banded together last year to pressure the Bureau of Insurance to open an investigation of Anthem’s operations called a market conduct examination, said Bob Reed, executive director of the Maine Chiropractic Association.

The Bureau of Insurance did not answer questions Friday about its Anthem probe and the involvement of professional associations in pushing for the investigation.

“The bureau is conducting a market conduct examination of Anthem, which will include a review of provider payment issues. The exam is expected to continue for several months. At this time, Anthem has worked through most of its backlog of claims,” bureau spokeswoman Judith Watters said this week.

Reed said all insurers have billing problems, but the issue seems far more widespread in Anthem’s case. It also was an issue that appears to have  largely simmered under the surface before MaineHealth and Maine Medical Center brought attention to it.

“I think Maine Medical Center going public really opened up a lot of people’s minds about what we thought was a smaller issue,” Reed said. “Every doctor is going to be quiet. They think ‘it must just be me.’ Situations like this make them realize it is not the individual doctor.”

https://www.pressherald.com/2022/04/08/health-care-providers-say-anthem-billing-problems-are-widespread/ 

Is a Misguided Hospital Building Boom Coming?

A $2 billion expansion of Mass General Brigham in Boston could open the floodgates.

Stories about therapeutic triumphs performed by the nation’s academic medical centers (AMCs) are a media staple: CAR-T therapy mobilizes the body’s immune system to fight cancer! Patients are rising from their deathbeds after double lung-heart transplants! Academic researchers played the crucial role in developing the COVID-19 mRNA vaccine! 

And, if you’re like me, you have friends who, after receiving a dire diagnosis from their regular physician, hightailed it to a local or national AMC for a second opinion. They probably received their treatment there when the original diagnosis proved positive.

It’s called prestige medicine. Who wouldn’t want to go to Mayo, the Cleveland Clinic, or their local equivalent if you have a serious heart condition; or Memorial Sloan Kettering, MD Anderson, or the local academic cancer center if you develop a life-threatening tumor?

But is care there better? Not necessarily. As patient safety advocates like the Leapfrog Group have repeatedly shown, safety grades for leading academic hospitals can range anywhere from A to D, with some of the best known (like Northwestern and the University of Illinois in my home city of Chicago, for instance) barely earning passing marks.

As for outcomes, one recent study suggested that AMCs achieve better results than community hospitals when measured by death within the first 30 days after treatment. Yet the same study showed that they didn’t outperform when it came to routine surgical procedures. A recent health care consulting firm study was less sanguine, finding that AMCs actually trail their community-based rivals on key outcome measures.

One thing is for certain: AMCs cost more—a lot more if you are commercially insured. That has led many employers to adopt high-deductible plans, forcing patients to pick up the first $1,000 or more of the bill. Many insurers have begun excluding pricey academic centers from their networks, and many patients seeking out prestige medicine wind up paying higher out-of-pocket costs than if they went to their local community hospital.

But cost concerns have not stopped the nation’s 140-plus AMCs and their proliferating outpatient facilities from gaining substantial market share in recent years. In some markets, like Pittsburgh and Boston, they’ve become so dominant that no insurer can afford to exclude the system from its network, which gives AMCs extraordinary power to demand higher prices. And they do.

Recent developments are working to make this imbalance even worse in ways that will aggravate health care inflation and accelerate the rapid decline of community-based health care in rural and low-income areas across America, making the inequities of the current system even worse than they already are.

Consider what is happening in Boston right now. Mass General Brigham (MGB), a recent combination of two of the nation’s elite medical institutions, both affiliated with Harvard Medical School, last year announced a $2.3 billion expansion plan that would both modernize its two flagship hospitals and grow them by more than 100 beds. The original plan also called for building three outpatient surgical facilities in wealthy suburbs. The expansion plan has drawn widespread opposition from local community hospitals, insurers, patient advocacy groups, the state attorney general and the Massachusetts Health Policy Commission, whose mission includes controlling costs.

Last week, MGB withdrew the suburban portion of its expansion plan in the face of that opposition. But the state is leaning toward approving the main hospitals’ $2 billion reconstruction plan. A win for MGB, which could come within days, will not only accelerate the restructuring of that city’s hospital sector but could also open the floodgates to similar projects in other markets and deal a severe setback to efforts to rein in total U.S. health care spending, which already consumes 20 percent of GDP, the highest in the world by a long shot.

The restructuring of the nation’s hospital sector began well before COVID, the result of hospital utilization trends that show every sign of resuming after the pandemic has wound down. Numerous large hospital construction projects have been announced by major academic medical centers in recent months. 

The University of Chicago Medical Center recently announced plans to build a new $633 million cancer hospital, part of a $1 billion project that will grow its total capacity by 24 percent, to 597 beds. Several multi-billion-dollar expansion projects are under way at the University of California medical centers in San Diego and Irvine. Penn Medicine in Philadelphia just opened its $1.6 billion expansion project. There are also major projects on the drawing board at several big nonprofit systems that are dominant in their markets and serve as teaching hospitals for local medical schools.

All this construction will be taking place amid stagnant hospital admissions. On a per capita basis, the number of patients entering hospitals has been on the decline for decades, according to data from the American Hospital Association. Advancing technology, the rise of outpatient surgical centers, and the growing hospital-at-home movement have combined to reduce hospital admissions and in-patient lengths of stay, and with that, a concomitant reduction in the number of staffed beds inside hospitals.

The losers have been community-based hospitals in cities and regions with stagnant or declining populations and rural hospitals. The winners have been large systems and AMCs, whose nonprofit status, stable balance sheets, and superior reputations enable them to capture patients previously served by neighboring, community hospitals. The Massachusetts commission study estimated that MGB’s $2 billion expansion would not only lead to sharply higher prices for commercially insured patients but also shift $261 million a year in existing spending to MGB from struggling community hospitals.

“These providers often operate on thin margins, so even a small shift could remove a key revenue stream that enables them to serve patients who are insured by MassHealth (the state’s Medicaid program) or Medicare or patients who are uninsured,” wrote Tim Murray, the president of the Worcester Chamber of Commerce, and Amy Rosenthal, executive director of Health Care For All, a consumer advocacy group, in CommonWealth magazine. “The financial instability could ultimately force them to close or scale back critical medical, behavioral health, and other services.”

Massachusetts is one of only five states that have adopted a system that sets annual benchmarks for overall spending on health care. In 2019, the year covered in the state’s most recent annual report, spending rose by 4.3 percent, well above the 3.1 percent benchmark.

The Health Policy Commission blamed Mass General Brigham, the most expensive system in the state, for much of the excess spending. This past January, the state ordered MGB to develop a performance improvement plan to lower its overall costs, the first time in its history the commission has issued such an order.

“Mass General Brigham has a spending problem,” says HPC chairman Stewart Altman, a professor of health policy at Brandeis University. “Continuing in this manner is likely to impact the state’s ability to meet its spending benchmark and could do serious harm to the structure of the state’s delivery system.”

MGB, for its part, has rejected every one of the policy commission’s assertions. It has run a huge local advertising campaign touting the expansion and sought to burnish its image with full-page ads in The New York Times, which has a wide readership in Boston. “It is important people know the facts, and advertising is just one way to make sure those facts are publicly known and set the record straight from unfounded claims,” Jennifer Street, a spokesperson for MGB, told The Boston Globe

MGB rejected every objection to its planned expansion in a commissioned report submitted to the state agency, whose ruling on the request is imminent. “The predicted changes in Mass General Brigham’s shares associated with the proposed project are modest and unlikely to change the system’s bargaining leverage with health insurers meaningfully,” the report, prepared by the Charles River Associates consulting firm, said. “Rather, the weight of the economics literature suggests that allowing capacity-constrained health care providers such as Massachusetts General Hospital to expand puts downward pressure on health care prices and reduces expenditures on health care services.”

It is a curious assertion, given that the economics literature is equally suggestive of just the opposite. The MGB report gives short shrift to the life’s work of Stanford University’s Victor Fuchs, whose pioneering work since the 1960s has outlined the information asymmetry that drives patients to more expensive care and inhibits competition; the studies, books, and journalism by Atul Gawande from the Dartmouth Atlas of Health Care, which documents how provider-driven supply coupled with physician-induced demand leads to extensive variation in the quantity of health care delivered in different markets; and the voluminous literature on physician-driven demand.

The MGB report also failed to consider the rapidly changing health care marketplace. It projected a steady increase in demand based on the aging of the population. It didn’t mention advances in technology driving surgeries and procedures to outpatient settings or the changing patient preferences for shorter stays and at-home care.

Neither Mass General Brigham nor the Health Policy Commission considered what should go into reconstructing the biggest hospital in Boston. What about flexible facilities to accommodate future pandemics, natural or man-made disasters, or mass casualty events? How can new construction projects better serve residents in low-income neighborhoods in worse health with lagging longevity and poor access to health care facilities? The public debate in Boston—and nationwide—is nonexistent.

I posed that question to Altman of the HPC. “Who’s doing planning for the future? We’ve stopped focusing on that,” he replied. “A number of people are focusing on concentration. But most of the research I see focuses on very different subjects. Planning used to be a very important subject, but it was abandoned in the 1980s. That decision really needs to be reviewed.”

https://washingtonmonthly.com/2022/04/08/is-a-misguided-hospital-building-boom-coming/ 

 

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