May 23, 2018
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Measuring the worth of health care

By Dennis Shubert, Special to the BDN

Maine Coast Memorial Hospital has chosen to take its contract dispute with Anthem Insurance public. In so doing the hospital clearly is hoping for public support for its position.

What are the issues? Health care in Maine is relatively expensive for many reasons, such as our rural setting and lack of true price competition to hold costs to a reasonable amount.

What should we consider?

In this situation Anthem is acting as our agent in negotiating a reasonable price for our health care. Whatever we may think of insurance companies or the role of the profit motive in health care, for those of us who actually pay for our care, Anthem is our major hope in trying to control our costs.

There is no price competition for health care in Maine. Hospitals and doctors have no control over what the state and the federal government pay on behalf of some of us. Experts suggest that MaineCare pays significantly less than the reasonable costs of the care it covers and Medicare pays about what it should. People without insurance pay little of the costs of their care and we can all understand why. Hospitals try to make up the difference by charging the rest of us more than the costs of our care.

Hospitals set their charges much higher than their actual costs — whether those costs are reasonable is a separate issue — and then negotiate a discount to insurers. It is like buying a car. No one would pay the manufacturer’s suggested retail price for a car or for health care. When a hospital concludes it needs more money it raises its charge (MSRP) and then discounts that charge. The amount of the discount is actually only somewhat important since hospitals can raise prices as they see fit. There is no strong market mechanism to control price increases.

Maine is in the forefront of the movement for hospitals to employ physicians. This is a two-edged sword because we have physicians here to care for us who we might not otherwise have, but we also pay more because of it. Hospitals are paid more for physician services than self-employed physicians receive for the same services. This is either good or bad, depending on your point of view.

There is no transparency in the system. It is impossible for the public to know what its 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 whether we will need that pound of health care when we buy it. Are we or will we be healthier because we bought that pound of health care?

Trying to understand these issues is likely to give you a headache. Just understand that there is no transparency, so it is nearly impossible to have an informed opinion on this contract dispute.

Will it be inconvenient for folks from Hancock Country if Maine Coast Memorial Hospital is not a contracted provider with Anthem? Sure. It is also inconvenient for some of us to move to another part of the state or another state because there are no jobs in Hancock County because the cost of health insurance has driven out employers and employees.

When a party in a contact dispute goes public, they are expecting that the public will be on their side. The purpose of this column is to point out that the pubic interest is not necessarily on the side of the local hospital. It is difficult to know where the actual long-term public interest lies. However, it would be helpful to have price competition for those of us who pay our own bills. It would be nice to pay a reasonable competitive rate for a pound of health care from all of our providers.

It is the job of the board of Maine Coast Memorial Hospital to ensure that the institution provides appropriate services for the size of its community at the lowest possible cost, while providing the highest possible quality. It is Anthem’s job to pay no more for a pound of health care 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.

Let’s hope that they both do their jobs well so that we might be able to afford a pound of quality health care in Hancock County.

Dennis Shubert of Seal Harbor is a retired neurosurgeon and former executive director of the Maine Quality Forum.

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