PERHAPS THE MOST vexing challenge the Massachusetts Legislature confronts as it seeks to lower health care costs is the disproportionate market power that certain hospital networks, including Partners HealthCare System, enjoy by virtue of their prestige, power, and customer appeal.
That clout has let those networks enjoy considerably higher reimbursements from insurers than other institutions receive for similar services. Often, the higher fees are justified by world-class care. In other instances — especially for basic services conducted at suburban hospitals that just happen to be part of the same network as Mass. General, Brigham and Women’s, or other teaching hospitals — the higher fees are an unjustified burden on patients and insurers. There is, however, a market-based fix that could go a long way toward restoring equal bargaining power between such networks and insurers: Force all hospitals in a network to negotiate their fees separately. Thus, Partners wouldn’t have so much negotiating power when it comes to leveraging higher prices for its suburban affiliates.