Consolidation & Transparency: A Look at Massachusetts’ Health Policy

MAHP1

A panel discussed the consolidation of healthcare providers at this year’s MAHP health policy conference. Photo by Abram Guerra.

Hundreds of attendees came to the Seaport Hotel on Friday, December 5th for the Massachusetts Association of Health Plans’ thirteenth annual Health Policy Conference. The leading voice for Massachusetts payers on issues of policy and regulation, MAHP advocates, educates and conducts research on behalf of their member health plans. The event focused on current and upcoming trends in the industry, and the business opportunities and threats those trends imply.

Continued Consolidation of Providers

The biggest takeaway from the event was the prevailing fear that the continued consolidation of healthcare providers would drive cost growth without any improvements to the quality of or access to healthcare services. In addition to concerns about provider consolidation peppered throughout the day, conference organizers dedicated a 75-minute panel, moderated by the Boston Globe’s healthcare and biotech reporter Priyanka Dayal Mccluskey, to the topic.

Perhaps the most compelling evidence of this trend came from incriminating e-mail transcripts and internal documents from recent FTC investigations, presented as simply the status quo by FTC Assistant Director Alexis J. Gilman. In one such email, Daniel Wakeman, then CEO of St Luke’s Hospital of Toledo, wrote “…we need to show them that we intend to merge with another system, and all the value we produce will be diluted, as our payments skyrocket.” In another presentation to St. Luke’s Board of Directors, a merger with another hospital system was framed as having “the greatest potential for higher hospital rates,” with the merged system having “a lot of negotiating clout.”

The other panelists echoed these strains, with Professor Robert J. Town of The Wharton School presenting his take on the drivers of provider consolidation: the high cost of Health IT and fears about dwindling market power in a post-PPACA economy. Suzanne F. Delblanco presented detailed research and analysis on these market trends as well.

A Call for Increased Transparency

Karyn Polito, Lieutenant Governor Elect of Massachusetts, reiterated the Baker administration’s commitment to better governance through transparency, a theme that made its way into every single session on Friday. But is this transparency actually available? Jim Braude, WGBH Radio personality and moderator of the final two panels, put it best: “The level of public interest in healthcare is matched only by the lack of understanding in healthcare.”

Many presenters and attendees expressed their concerns over a persistent lack of information on healthcare delivery innovation. Others, including the Lieutenant Governor Elect, pointed out that we still lack meaningful pricing information—a precondition to any healthy market.

In fact, when a panel of leaders from every corner of the market was given the opportunity to pinpoint one initiative that might ‘fix’ healthcare, three out of five cited issues around transparency: common claims processing, full pricing transparency, and real-time claims and delivery data. Transparency may or may not be the promised panacea we all hope it will be, but you can expect increased pressure for more of it from all sides of the market.

Back to the Future

Those of us who weren’t working in the healthcare industry 20 or more years ago would do well to heed the advice of those who experienced the last megatrend in healthcare. Again and again on Friday, industry veterans warned that HMO and ACO share more than the word “organization.” Managing care is not the same as managing costs, and accountability is about more than how we buy and sell care – but if we are not careful about the implementation of PPACA and all of the resulting structures, the ACO movement may face the same fate as the HMO movement.

Stuart Altman, Chair of the Massachusetts Health Policy Commission, framed the warning signs as the “Four Ps”: First, Providers will say ‘How can you do this to us?’, then Patients will ask ‘Why won’t you let them treat us?’ Then the Press will run with the story and make movies about the evil corporations that deny legitimate health needs, until finally Politicians will yield to public opinion.

These pitfalls aside, the urgency and importance of changing our healthcare system is obvious to everyone. One vision for the future was presented by renowned Harvard Business School Professor Regina Herzlinger, author of “Who Killed Health Care?” Herzlinger likens the current system to the retail industry in the mid 20th century, when Americans bought everything from the same department store or catalog. The emergence of better data about consumer preferences led to more focused innovation in that sector, with the emergence of new stores that specialized in satisfying their chosen niche, and financing and distribution models that made the department stores seem antiquated.

Herzlinger thinks the future of healthcare looks like a more consumer-oriented system, where consumers can select the insurance coverage and services that are the best fit for them. She also points out that other countries are facing the same cost, quality, and access problems that we are, but examples like the Vitality Group in South Africa, Amil Participações in Brazil, and Health City in the Cayman Islands are all showing that innovation can and will transform the health care system.

Abram Guerra

Abram Guerra

    Abram Guerra is Founder and COO at Datafeel, a patient engagement SaaS platform that helps payers achieve better outcomes for Type II Diabetes and Pre-Diabetes populations. He also consults for clients pursuing patient-centered innovation, and social, mobile, and content marketing strategies. Abram holds an MBA in Strategy and an MS in Information Systems from Boston University, and a BA in English Literature from California State University Los Angeles. Find him at www.abrm.us

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