Mass. Health Plans Report: Payment Reform Won’t Fix Prices

Two charts: " Globally Paid Providers Do Not Have Consistently Lower  Total Medical Expense" and "Price Increases Caused the Majority of the Increases in  Health Care Costs in the Last Six Years" (2011 Annual Report of the Massachusetts Association of Health Plans)

From the 2011 Annual Report of the Massachusetts Association of Health Plans.

The latest Massachusetts Association of Health Plans annual report is out, and it offers some very colorful visual reminders of a point many in the state have been making: To stem the growth in health care costs, payment reform is not enough; something must be done about the “market distortion” that allows some hospitals to charge far higher prices than others.

As illustrated in the chart above, in which the hospitals with yellow circles next to them have long been part of payment-reform-type plans yet remain relatively expensive, “Changing the way we pay is just not enough,” association president Lora M. Pellegrini said.

“You have to address the market power issues and the price distortion issues,” she said. “Legislation that deals with payment reform issues only and that doesn’t address market distortion issues is not going to fix our cost problem.”

The report includes comments from three state leaders — Attorney General Martha Coakley, House majority leader Ronald Mariano, and Administration and Finance Secretary Jay Gonzalez — on possible solutions. You can download the whole document here.
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  • bgrggfe

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  • JohnSpek

    A private industry is only controlled by market prices and market costs
    If a doctor costs 200K to get to work at the hospital, that is what it costs

    The hospital can decline to hire the doctor, and find one who only costs 50K

    If patents die, and hospital loses market share, hospital closes

    then everyone loses

    The state can always buy a hospital and run it as a non-profit entity

    The budget impact will be interesting to watch