Paul Levy ‘Does The Math,’ Says New Partners Contracts Increase Disparity

Paul Levy of "Not Running A Hospital"

WBUR’s Martha Bebinger had a couple of follow-up questions for Paul Levy, former chief of Beth Israel Deaconess Medical Center and still a widely read blogger who, among a great many other topics, regularly takes Partners HealthCare to task for its high prices.

One of his latest posts discusses Partners’ recent renegotiation of its contracts with Blue Cross and Tufts Health Plan, touted in press releases as saving tens of millions of dollars. He writes that the new contracts will only increase the disparity between Partners’ prices and everyone else’s, and he calculates that over the last decade, Partners has added roughly $2 billion to health care costs paid by Massachusetts businesses and individuals.

Martha asked via email:

1)Why would the disparity between Partners HealthCare System rates and other providers increase under this contract?

2)How do you get the $2 billion figure?

And Paul Levy replied:

Simple math, Martha. Everyone else is getting rate increases of, at most, the same 2-3 percent. Many are getting below that. Since the base for the others was lower than PHS, the spread between the PHS rates and theirs has to be growing.

Example:

I get paid $100 for a DRG.
PHS gets paid $115.
The difference is $15.

We both get a 2% rate increase.

I now get paid $102.
PHS now gets paid $117.30.
The difference is now $15.30.

The $2 billion comes out of the Globe spotlight story from a couple of years ago, work by the AG, and my own calculations over the years.

It is probably conservative. To get at it, you need to add up ten years of annual clinical revenues from the PHS hospitals and doctors (you need to include both). You then need to know that the hospitals were paid, say, 15% more than everyone else; and the doctors about 25% more than everyone else. Do the reverse math, and you get a very big number.

The latest post on the new contracts on the Partners blog, Connect With Partners, is here.

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