Regional Insights: Health care 'business as usual' not good enough
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The prospect of a "divorce" between the region's largest health insurer (Highmark) and the region's largest hospital system (University of Pittsburgh Medical Center) has caused concern for many residents of the region. Will they have to switch doctors or change insurance? Many community leaders have called on Highmark and UPMC to settle their differences and return to business as usual.
However, business "as usual" isn't good enough anymore. The high cost of health care is hurting businesses and families, both nationally and in southwestern Pennsylvania. We need to find ways to make health insurance more affordable without denying patients the care they need.
Contrary to popular belief, the reason health insurance costs are increasing is not lack of competition among health plans. There is growing evidence nationally that a major cause of high costs is high prices charged by large health systems.
For example, last year an investigation by the Massachusetts attorney general found that some of the larger hospitals and physician groups in that state charged twice as much or more than others for the same services. The higher-priced facilities did not provide higher quality of care, nor were they paid more because they treated more complex patients or had teaching programs. The only explanation was that big hospitals and physician groups had the power to demand and receive higher prices. Moreover, the report found that "price increases, not increases in utilization, caused most of the increases in health care costs during the past few years in Massachusetts."
High prices are not just a problem in Massachusetts. The health insurance commissioner in Rhode Island found that large health systems in that state were being paid 50 percent more than smaller hospitals for the same procedures. The Medicare Payment Advisory Commission (MedPAC) issued a report last month that showed that in many regions of the country, some hospitals and physician groups are paid twice as much or more than others.
In the Pittsburgh region, the amount that hospitals are paid by health plans is a closely guarded secret, but several years ago, the Pennsylvania Health Care Cost Containment Council (PHC4) revealed what our hospitals are actually paid by commercial health plans. While some hospitals in southwestern Pennsylvania were paid an average of $18,000 to perform heart bypass surgery, others were paid as much as $35,000 for the same procedure.
First Published July 3, 2011 12:00 am
