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Steward, hospital industry titans butt heads on ballot question

The president of Steward Health Care System-owned Norwood Hospital (above) said payment disparities between higher-priced teaching hospitals and their lower-priced competitors are a major threat to the survival of community hospitals.

Norwood Hospital

The president of Steward Health Care System-owned Norwood Hospital (above) said payment disparities between higher-priced teaching hospitals and their lower-priced competitors are a major threat to the survival of community hospitals.

Steward Health Care System is breaking ranks with the rest of the hospital industry and throwing its support behind a controversial ballot proposal to take hundreds of millions of dollars from the state’s wealthiest hospitals and give them to lower-paid community hospitals.

The measure, pushed by the Service Employees International Union, would drastically change the way hospitals are paid and faces strong opposition from the hospital industry’s main trade group, the Massachusetts Hospital Association.

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But at a public hearing at the State House on Tuesday, Kim Bassett, president of Steward-owned Norwood Hospital, said payment disparities between higher-priced teaching hospitals and their lower-priced competitors are a major threat to the survival of community hospitals and require “immediate intervention.”

The SEIU proposal would regulate payments between insurance companies and hospitals, cutting payments to the priciest hospitals while boosting payments for lower-paid community hospitals. Backers of the initiative need to collect more signatures this summer before the question can make it to the November ballot.

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Under the union’s proposal, Partners HealthCare, the state’s largest and most expensive health system, would lose nearly $440 million in payments, while South Shore Hospital in Weymouth would lose nearly $17 million.

But other hospitals stand to gain millions from the proposal. Steward’s nine hospitals together would get $21 million.

The wide variation in the prices of medical services is a long-running issue in Massachusetts, documented by a Boston Globe investigation and several state reports. Recent studies from Attorney General Maura Healey’s office and the state Health Policy Commission have found that some health care providers continue to be paid more than their competitors for providing essentially the same quality of care.

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Price disparities drive up overall health spending because the most expensive health care providers also treat the most patients. Bassett said the union’s proposal “may not be the ideal approach” to some people, but it would begin to address the lower payments that make it difficult for community hospitals to support their operations.

The thorny issue of price disparities has split the hospital industry. Steward, a for-profit company backed by a private equity firm, is the only major hospital system to come out in favor of redistributing payments as proposed by the SEIU. Lahey Health of Burlington opposes the union’s ballot question and a similar bill filed in the Legislature. But Lahey has urged lawmakers to come up with other proposals to address price disparities.

Partners, the parent company of Massachusetts General and Brigham and Women’s hospitals, opposes both the ballot question and legislation.

The Massachusetts Hospital Association, which represents Partners and many of its competitors, also opposes both the ballot question and the bill. Steward is not a member of the trade group.

Timothy F. Gens, executive vice president of the association, said regulating hospital payments is the wrong approach for addressing a complicated issue.

Meanwhile, another industry group, the Massachusetts Council of Community Hospitals, opposes setting policy by ballot question, but favors legislation that would help community hospitals.

Steve Walsh, executive director of the group, said community hospitals are in “crisis,” losing business to higher-paid teaching hospitals with strong brand names, as well as to new walk-in clinics. Walsh is a former state representative from Lynn and former chairman of the House Committee on Health Care Financing.

It’s unclear whether legislators will act on the issue.

If lawmakers don’t take action in the coming months, officials of SEIU’s Local 1199, which represents 52,000 health care workers in Massachusetts, have vowed to get the issue on the November ballot.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.
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