Health Care Cost Questions

Posted Sept. 29, 2008, at 5:12 p.m.
Last modified March 20, 2011, at 3:24 a.m.

A dispute between the hospital in Ellsworth and the state’s largest health insurance company is a symptom of a much larger problem. Without adequate information on what health care costs, insurers, lawmakers and others have no real idea whether medical care in Maine is too expensive.

Maine Coast Memorial Hospital and Anthem Blue Cross and Blue Shield have reached a stalemate in negotiations over a new contract for patients covered by the insurance company. At issue is the discount the hospital provides to Anthem. Hospitals and insurance companies negotiate how much the company will pay for its share of a bill for medical services. According to the hospital’s CEO, Douglas Jones, Anthem wants the hospital to triple the discount the insurance company would receive. The hospital says this would cost it $2.6 million a year. The hospital’s annual revenue is about $90 million, with payments from Anthem accounting for about $20 million.

In a statement, Anthem said it believes the cost of services at Maine Coast Memorial is too high compared to other, similarly sized Maine hospitals.

Although public sympathy is likely to rest with the hospital, the public’s best hope in reducing health care costs in this scenario is Anthem, retired physician Dennis Shubert wrote on Friday’s OpEd page. Dr. Shubert served for nearly three years as the executive director of the Maine Quality Forum, which aims to provide consumers with information on hospital and doctor performance.

The problem, he wrote, is that “It is impossible for the public to know what it costs Maine Coast Memorial Hospital to produce a pound of health care. It is impossible to know the quality of that pound of health care. We don’t even know that when we buy a pound of health care, do we need that pound of health care? Are we or will we be healthier because we bought that pound of health care?”

“It is Anthem’s job to pay no more for a pound of health car in Hancock County than it would anywhere else in the state. It is also Anthem’s job to help hold down health care costs to a reasonable minimum as determined by nationwide comparisons,” Dr. Shubert concludes.

A further complication, according to Rep. John Brautigam, House chairman of the Legislature’s Insurance and Financial Services Committee, is that the state can’t decide how it wants to hold down costs. Is competition the answer? Probably not because in rural areas patients don’t have a choice of hospitals. Global budgeting — limiting health care expenditures statewide — is politically impossible. Voluntary savings through the state’s Dirigo Health program have been controversial from the start. Encouraging more healthful lifestyles to reduce visits to doctors’ offices and hospital stays is slow to show results.

Without knowing what true health care costs are and without agreement on how to limit them there will be more disputes between hospitals and insurers, which only hurts patients who must travel farther for treatment or, worse, forgo it.

But, as Dr. Shubert wrote, this inconvenience must be weighed against the inconvenience of people leaving rural areas or Maine altogether in search of jobs because the cost of health insurance has driven out employers.

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