In the final days of the 18-month effort to pass health care cost containment legislation, state lawmakers have been making an intense 11th-hour attempt to address the market power of big, influential hospitals and hospital networks. Yet the House and Senate haven’t found common ground there — and their inability to do so shows just how complex the issue is.
Hospitals like Mass. General and Brigham and Women’s are landmark institutions vital to the Massachusetts economy. Yet these same institutions have led the upward march of health care prices. Every hospital must be part of the effort to rein in health care costs, and every hospital should be responsive to market pressures.
The Patrick administration is now pressing a plan to empower a new health care institute to conduct cost and market-impact reviews of high-priced providers. In cases where a provider charges “materially” higher prices, has a dominant market share, and spends “materially” more on care for its patients, the institute would turn that information over to the attorney general for possible further action.
The administration says it simply wants a clear process to pursue market-power concerns. Yet the plan is worrisome on several fronts. For starters, its vague language would largely let the new institute decide both what would trigger its own review — and which price, market-share, and medical-spending thresholds would mean a referral to the attorney general. “The language is so broad,” worries Michael Widmer, president of the Massachusetts Taxpayers Foundation, “that it will invite a constant stream of arbitrary and counterproductive investigations.”
The institute could also undertake a review if it believed a provider “may be planning” to engage in unfair competition. But establishing such intent would take detailed inside information or a crystal ball.
The administration stresses that its plan wouldn’t grant the attorney general new powers to intervene in the health care sector. Yet that suggests another problem: With so many of the institute’s standards to be determined later, the governor’s plan could lead to long, costly reviews that yield far too little for the attorney general to act on.
If such a provision is to be included in the final bill, it needs to be much more tightly and narrowly defined, with unambiguous standards. Further, beyond reviewing the market impact of proposed mergers or acquisitions, the institute should not be in the business of investigating plans for future behavior.
That seems a very big task in the limited time left. It’s still worth trying to find broadly acceptable language for curbing the disproportionate market power of some providers. Failing that, the wisest course would be to agree on measures that have been fully considered and vetted — provisions involving wellness, transparency, medical malpractice law, administrative simplification, and electronic medical records. Lawmakers should also come together on the explicit goal of keeping the growth in health care costs at or near the level of economic growth.
If need be, they could then leave the matter of market power for next year, when it could be more fully examined and carefully considered. It’s too important an issue to get wrong.