News & Events

High costs aren’t due to local issues, Partners says

By Liz Kowalczyk, Globe Staff  |  January 12, 2010

Partners HealthCare – unlike many of its competitors, which were no-shows at hearings last week – appeared before state regulators yesterday to explain the reasons for skyrocketing health care costs, saying it is not to blame.

David McGuire, Partners vice president for system contracting, told Division of Insurance officials that rising insurance costs are a national phenomenon, not solely a state problem caused by higher reimbursement rates paid by insurers to Partners hospitals.

Instead, he cited inadequate rates paid by Medicare and Medicaid, the government insurance programs, which increase costs for everyone else.

“We have no other way to make up these low payments than to charge more to private insurers,’’ he said.

Partners, the state’s largest hospital and physician network, which includes Massachusetts General and Brigham and Women’s hospitals, has been under scrutiny from regulators because it often receives much higher fees than other hospitals for providing the same services to patients. Yesterday, the network won points with state regulators investigating the reasons for rising costs by agreeing to testify before Division of Insurance officials.

The hearings are part of a probe by the Patrick administration that started as an inquiry into the reasons for the disproportionately high health insurance rates paid by small businesses, but has since expanded into a larger systemwide inquiry.

Last Thursday, just two of the 17 hospitals or hospital networks invited to testify appeared at the hearing: Cambridge Health Alliance and Emerson Hospital in Concord. The turnout Friday was equally disappointing: Just Mercy Medical Center and Vanguard Health Systems showed up.

Yesterday, Partners, New England Baptist Hospital, Northeast Health System, Nashoba Valley Medical Center, and Saints Medical Center all testified. Officials of some of the hospitals that did not appear have said they plan to submit written testimony.

Kevin Beagan, deputy commissioner of insurance, did most of the questioning and at one point asked McGuire why Partners’ hospitals’ costs are generally higher than those of competitors.

“We have more capacity for very high-end services that have to be in place at all times, such as trauma and burn services,’’ he said. “The cost of those gets spread across all other services.’’

Beagan left it at that. But he grilled executives from all the hospitals about the reasons for their rising costs, and what they are doing to try to control those costs.

“We’re trying to get to the bottom of this,’’ he said.

Tom Gheringhelli, chief financial officer at New England Baptist, said 70 percent of his hospital’s costs are for paying employees, particularly nurses, the price of which is rising fast.

“You want to have seasoned OR nurses,’’ he said. “We know that we are vulnerable on that. Other hospitals could hire our help. We feel we’re always chasing the market.’’

Liz Kowalczyk can be reached at