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Report: In Mass. Health Care, System Skewed So Rich Get Richer

A report released today by the Healthcare Equality and Affordability League (H.E.A.L.) — a partnership between the for-profit Steward Health Care System and the union, 1199 SEIU United Healthcare Workers East — finds that disparities in hospital costs and financing across the state are driving “a vicious cycle” of inequality in health care.

The result, according to this analysis, is that medical care is becoming less affordable for lower-and middle-income families in Massachusetts, and the disparities in hospital financing are “compromising the viability of community hospitals.”

The group is calling for new, and what they call more “fair” reimbursement rates so that poorer, community hospitals (with a greater proportion of Medicare and Medicaid patients compared to the higher-cost Boston teaching hospitals) can continue to serve the lower-income patients, among other financial recommendations.

David Williams, president of the Boston consulting firm Health Business Group, who was paid by H.E.A.L to research and co-author the report, says: “What hasn’t been demonstrated before is what impact these financing disparities have on communities and community hospitals.”

He notes: “The hospitals that have the highest percentage of publicly funded patients, they get paid less, but in addition to that, those hospitals also get the lowest commercial rates — because they’re not in as strong a position to negotiate — so that means that they’re doubly disadvantaged…it means that the hospitals serving middle-class and lower income communities don’t have the resources to compete effectively with those hospitals that get higher reimbursements.”

Clearly, the group’s recommendations would benefit the Steward-owned hospitals, Williams acknowledges, but, he adds: “it would also help with the state’s overall approach to cost containment.

I asked Nancy Turnbull, an associate dean at the Harvard School of Public Health, to take a look at the report and here’s what she had to say:

…This report looks to be raising critical issues regarding payment disparities. We’ve known for years, from the work of the [Attorney General], [Center for Health Information and Analysis] and others that these disparities exist and are, in many cases, getting worse. So far, we’ve done little to address them, and the effect these disparities have on lower paid providers and the patients for whom they care. However, I don’t think the solution is, in most cases, to just increase the rates of payment for poorly paid providers, although that is a needed action for some. We also need to talk about reallocation of existing payments, and about costs. I am supportive, to some extent, of giving consumers reasonable financial incentives, based on their income, to use lower cost providers—although lower paid is not the same as lower cost–but we also need approaches that are systemic. Consumers in tiered and high deductible health plans aren’t going to solve this problem without tough action by state government and other payers, including, in my opinion some regulation of rates of payment. And most tiered networks available so far are regressive — they impose higher costs on lower-and moderate-income people. They address one form of inequality by creating another.

Among the findings, according to the H.E.A.L press release:

“The rich get richer as highest cost hospitals attract a greater proportion of patients with commercial insurance, which have higher reimbursement rates than Medicare and Medicaid.”

(H.E.A.L report)

(H.E.A.L report)

–“Patient migration for routine care from community hospitals to high cost Boston teaching hospitals increases total medical costs and contributes to higher premiums for all individuals and families with commercial insurance (non-Medicare nor Medicaid). Additionally, low-income patients, forced to travel greater distances to receive routine care are more likely to forgo treatment until conditions become acute and require more expensive interventions.”  Continue reading

Labor Union Asks Baystate To Reconsider Job Cuts

Even though the 1199 Service Employees International Union does not represent workers at Baystate Health — which recently announced it will cut 354 jobs — the union is asking the hospital system to reconsider eliminating those positions in light of a new infusion of $17 in federal funds Baystate is slated to receive as early as October.

Kyle Cheney of StateHouse News reports:

According to 1199SEIU, which boasts 42,000 members statewide, Baystate Health will receive $17 million under a new federal funding formula for “rural” hospitals implemented by the U.S. Centers for Medicare and Medicaid Services. The union also pointed out that Baystate posted a $49 million profit in 2010 and has reported healthy operating margins.

A spokeswoman for Baystate Health, Jane Albert, questioned 1199SEIU’s call, noting that the union has “no connection” to Baystate Health. She also described the $17 million infusion of funds as the federal government “righting a wrong” by returning funds that had been taken away in previous years. Additionally, she said, the hospital’s $49 million operating margin in 2010 – on a $1.6 billion budget – has been used to make necessary capital investments.

“Forty-nine million dollars that’s all been reinvested doesn’t even reach the level we need . . . in order to invest in capital and our facilities and technology,” Albert said. “In the context of the entire operation of Baystate Health on a $1.6 billion budget, there are a lot of capital needs that as a nonprofit we have an obligation to do and to provide the best care for our patients…”

Baystate Health’s network – Baystate Medical Center in Springfield, Baystate Mary Lane Hospital in Ware and Baystate Franklin Medical Center in Greenfield – includes 783 beds and 10,000 employees, according to the company. More than 650 of those beds are located at the Springfield facility. The hospital is affiliated with Tufts University Medical Center, and 1199SEIU describes it as “Springfield’s largest private employer.”

Jeff Hall, a spokesman for 1199SEIU, acknowledged that the union has no members at Baystate Medical Center but added that officials had been contacted by hospital employees concerned about the layoffs.

The August 9 letter from SEIU’s Executive President Veronica Turner to Baystate President Mark Tolosky here.

Markey And Others Warn Against Proposed Federal Health Cuts


Jeff Hall of 1199SEIU, the state’s largest health care union, sent over word on today’s Brighton event protesting cuts to Medicare and Medicaid recently proposed in Congress. From the release:

BOSTON – Capitol Hill is on a reckless one-way path to cuts, including deep and dangerous cuts to health care programs for seniors, working families, and people with disabilities. Today, at the Veronica Smith Senior Center in Brighton, Congressman Edward Markey joined the Massachusetts Coalition for a Working Economy, in calling on Congress to stand up against deep and damaging cuts to Medicare and Medicaid.
“The Republican budget is a disaster for seniors, children and vulnerable Americans who rely on Medicare and Medicaid. It cuts off help for Grandma and Grandpa to pay for their prescriptions but lavishes tax cuts on Big Oil and billionaires,” declared Congressman Markey.

Background:

The Massachusetts Coalition for a Working Economy is a newly formed alliance of healthcare, senior, education, housing, labor, and other advocacy groups focused on promoting federal policy that creates good jobs and strengthens public services through investment in communities.

Health Care For All analyzes the effects of the proposed Republican budget here.