Monday, October 08, 2012

$90 million. Golly.

In recent news reports, much was made of a gift by Partners Healthcare System, the (by far) dominant hospital and physician organization in Massachusetts.  PHS announced that it, along with its newly acquired insurance company, would be granting $90 million over the next fifteen years to 49 community health centers in the state.

To normal people, $90 million sounds like a lot.  To health care finance people, this sounds like about one percent of Partners’ billions in operating income during that period (assuming no increase in earnings from the generous reimbursement contracts it has secured, nor from its increase in market share over the coming years.)

To normal people, the idea of the gift seems generous.  To people concerned about market dominance, it feels like yet another way to cement or attract the loyalty of local health centers as referral sources for patients to be sent to PHS hospitals.

This is what happens when the state gives away the store to a dominant provider.  The provider uses the money and takes actions that burnish its image and help build market share.  Grant recipients, grateful for any crumbs, dare not complain.  The press dutifully reports the story without providing context.

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