Health & wellness

Hospitals mobilize on health cost bill

Fearing ‘overreach’ by state, they mount lobbying blitz

Last Monday, leaders from Partners HealthCare System Inc. gathered in the dark-paneled office of Massachusetts House Speaker Robert DeLeo to lay out their objections to his expansive 278-page plan to tame health care costs.

The House proposal, unveiled 10 days earlier, called in part for closer oversight of the prices and operations of hospitals and their physicians groups, especially more costly ones like those owned by Partners, and influential board chairman Jack Connors requested a meeting.

“This is overreaching,’’ he cautioned the speaker and other key House members. Too much regulation, he warned, referring to the health care industry, could hurt the “golden goose.’’


The Harvard-affiliated Partners has led the lobbying charge among hospitals deeply worried that the House legislation and other bills - intended to bring relief to consumers and employers struggling to pay high health insurance premiums - could harm their ability to provide high-quality care and cost jobs.

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Last year, Massachusetts hospitals and medical organizations spent $9 million on lobbying politicians, more than any other sector, reflecting both the industry’s size and also the high stakes. Nearly $1 million of that total was spent by Partners, the largest provider network in the state with nine hospitals and 6,000 doctors. Steward Health Care System, Partners’ largest competitor, spent $362,000.

Since 2009, when the debate over health care costs started to heat up, Partners’ lobbying spending has almost tripled, which the nonprofit says is mostly due to a new law that expanded the definition of lobbying. Other teaching hospitals’ expenditures have risen, too -although by smaller amounts. The 80-member Massachusetts Hospital Association spent $750,000 on lobbying in 2011. Spending figures for the first half of 2012 will be available in July.

Health insurers also have actively lobbied for more scrutiny of the most expensive providers, roughly doubling spending between 2009 and 2011. Still, health plans spent less than a third of what the hospital and medical industry did last year.

Legislators say that hospitals have been heard. Bills filed by the House, Senate, and Governor Deval Patrick all have stayed away from direct regulation of provider fees and have stressed their desire not to do anything that might constrain health care excellence or advances.


DeLeo, in introducing the House bill, said “we can’t stifle that type of innovation,’’ referring to Richard Mangino of Revere, who received a double-hand transplant at Brigham and Women’s Hospital, which is part of Partners. DeLeo and Mangino met during a tour of Brigham to show off medical advances.

Both the Senate and House plans would require the health care industry to slow spending on medical care, though the House is more aggressive on this score.

By 2016, the House calls for spending increases to shrink to half a percentage point less than the annual growth rate of the state’s overall economy - currently about 3.7 percent. The Senate wants the industry held to the same rate of growth as the economy in four years.

The Senate plan is also somewhat friendlier to hospitals, allowing the industry more freedom to reduce costs on its own - which hospitals claim they are already doing by better coordinating patient care and reducing infections and readmissions.

The House wants to impose a luxury tax on providers that charge prices they cannot prove are linked to above-average quality and redistribute that money to financially shaky hospitals.


Since the Senate approved its bill on Thursday and the House is unlikely to debate its proposal until later this month, hospitals are now focused on working with House leaders to soften specific measures before legislators and the administration attempt to hammer out a compromise law before July 31.

‘You can’t [reduce health care costs] without squeezing somebody.’

Mass. House majority leader Ronald Mariano 

During the meeting last Monday in DeLeo’s office, Connors, Partners president Gary Gottlieb, and Partners lobbyists John Sasso and Joseph Alviani told the speaker and three House leaders that they were concerned that a new independent agency charged with enforcing the limits on spending growth would have too much power.

They also objected to a provision in the House bill that could force hospitals in large networks such as Partners to negotiate contracts with insurers separately, saying it would reduce their leverage.

Partners would not comment on details of the meeting, but spokesman Rich Copp said in a written statement that the organization’s message is that “hospitals, government, insurers, and businesses must work together to build upon the many innovations already underway in the marketplace to address the issue of affordability. We must be careful not to overreach and stifle the innovation by over regulating.’’

House majority leader Ronald Mariano, a Democrat from Quincy, called the meeting “cordial and gentlemanly. They made some good points about slowing this down a little. There is a good portion of medical expenses they have no control over, the aging population, pharmaceutical prices. We have to figure out a way to adjust for that.’’

But, he said, ultimately “the charge of the bill is to take costs out of the system, and you can’t do that without squeezing somebody. They are the biggest, so they are going to get squeezed the most.’’

DeLeo would not comment on the meeting, but a spokesman said he has listened to any group that has requested an appointment.

Representative Steven Walsh, a Lynn Democrat who led the House effort, said he will consider Partners’ concerns, as he does with all the hospitals he is meeting with.

In February, Walsh spent a day at Partners’ headquarters, at his request, talking to doctors about coordinating care for patients to prevent costly illnesses.

“I am not looking for commercials,’’ he said. “I am looking for information. They are very good health care folks, and we can learn from them.’’

Lynn Nicholas, president of the hospital association, said the House’s spending benchmarks are too aggressive. “Even to get down to [the Senate goal] there will be a shrinking of the market so that we will lose jobs,’’ she warned.

Academic medical centers have particular concerns about some of the proposals, said John Erwin, executive director of the Conference of Boston Teaching Hospitals, though he added that the bills contain positive measures, such as recognizing that the state must improve Medicaid rates for providers.

The House plan calls for “smart tiering,’’ which would allow insurers to charge consumers higher out-of-pocket costs for seeking specific services, like delivering a baby or having a knee replacement, at more expensive hospitals. It also would set a 400,000-patient cap for accountable care organizations, large provider groups banding together to coordinate patient care, which both Partners and Steward would exceed. And it would require a hospital to be 16 percent cheaper than the average hospital - rather than the current 12 percent - for insurers to include it in a limited, lower-cost provider network.

“We feel this will lead to more networks that don’t include teaching hospitals,’’ Erwin said. “It’s overly aggressive. It could be an issue of access. For many people, the teaching hospital is their community hospital.’’

While hospitals are arguing their case, legislators face pressures from the other side, too.

Associated Industries of Massachusetts, the largest employer group in the state, e-mailed senators a letter Tuesday encouraging them to “be bold’’ and reduce growth in health care spending even more aggressively than the House calls for: to 2 percentage points below the gross state product. It plans a similar mailing to House members.

“Economists say 30 percent of health care spending is wasteful and inappropriate,’’ said Richard Lord, president of the group. “That is a burden that falls on the other 85 percent of the economy that’s not in health care.’’

Liz Kowalczyk can be reached at