Harvard Pilgrim and Tufts –the second and third largest health plans in Massachusetts– are merging. It deserves the front page treatment it’s receiving today (check out the comprehensive coverage in the Boston Globe) –and will have an impact on employees and members– but I predict that the long term impact on Massachusetts healthcare overall will be modest at best.
To boil it down, despite being ranked by NCQA as the top two health plans in the whole country for many years (here’s 2014 for example), it’s been a long time since either Harvard or Tufts had a major influence in the local market. That’s harsh but I don’t think I’m overstating things.
In 2001 when I was setting up my business and looking for health insurance, I asked around about which insurer to use. My doctors said they were indifferent, but a friend at Partners Health Care told me Blue Cross was the only plan they paid attention to.
The last time Tufts tried to seriously impact the market was about 20 years ago, when Partners HealthCare manhandled them in rate negotiations. And former Harvard Pilgrim CEO, Charlie Baker admitted publicly around the early aughts that when Harvard Pilgrim tried innovative reimbursement structures, hospitals just ignored them and converted everything into Medicare equivalents. And clearly the attempt to channel volume to community hospitals and away from Partners was a bust.
At least in Baker’s current job as Governor he has some influence.
I don’t mean to be cynical at all. I’ve followed both of these mission-driven companies for many years and would love the new combined entity to be an influential innovator –not just in holding down costs but in radically improving experience and quality as well.
But after so many years of banging their heads against the wall, will they give it another go? I kind of doubt it. As the number 2 player in an insurance market led by Blue Cross Blue Shield, and a healthcare market dominated at the Massachusetts level by Partners and BI/Lahey and overall by the federal and state governments, I see their role mainly around the margins. I’m not sure their leadership is ready to go all out to change the system either.
In the last several years, under CEO Andrew Dreyfus, Blue Cross has actually passed Harvard Pilgrim and Tufts in the NCQA ratings. It’s been more innovative as well, with the Alternative Quality Contract (AQC) in particular.
I looked back this morning at my blog coverage of these companies over the years and picked out some highlights.
I’ve interviewed the CEOs of all three:
Tom Croswell, who will head the combined entity and is currently CEO of Tufts (2018)
Eric Schultz, then CEO of Harvard Pilgrim in a four-part video series in 2011 and again in a podcast in 2013
Charlie Baker, when he was running for Governor in 2014. (I interviewed every candidate that year)
“My guess is that regulators would not like this,” said David E. Williams, president of the Boston consulting firm Health Business Group. “There’s no compelling logic for a merger here. There would be a lot of resistance to it.”
Williams said he doesn’t see a good business reason for a merger since Partners and Harvard Pilgrim, one of the largest health insurers in Massachusetts, could choose to work together more closely while remaining independent.
I’m pretty sure the idea of a merger won’t get very far. Stay tuned.
Early in 2014 I interviewed Massachusetts Governor-elect Charlie Baker (and all the other candidates) about healthcare policy. Now that he’s won the election I have re-posted the interview. I hope to interview him again in the coming months.
Baker has tremendous, relevant experience in healthcare. He was CEO of Harvard Pilgrim Health Care and Secretary of Health and Human Services before that. Healthcare is a huge issue for Massachusetts, so it’s great to have someone at the helm with that background.
Excerpts from the interview are below. The full transcript is available here.
Question 1: Does Chapter 224 represent the right approach to addressing rising health care costs? If not, where does it miss the mark and what would you do differently?
Baker expresses openness to this approach, but only if the Commission and administrators can address three main issues he sees as “fundamental to dealing with the rising cost of healthcare”:
Lack of transparency regarding price and performance. Price variations are “known to many people who currently work in the system, but are not known to those actually receiving the service.”
224 must address the “…roughly 5% of the population who account for 50% of healthcare expenditures.” These are people managing multiple chronic illnesses, who end up “pinballing all over the healthcare system”.
224 has the potential: “to move us in the opposite direction” due to the “enormous amount of administrivia in healthcare.” The state should focus on working with the provider community to reduce the amount of “non value-added” paperwork and bureaucracy within the current system. “There’s a lot of money we’re chewing up that isn’t really adding very much to the patient experience.”
Question 2: Certain provider systems in Massachusetts are reimbursed significantly more than others for the same services even though there are virtually no differences in quality. Does the state have a part to play in addressing these disparities?
Baker believes the state already has the power to “make the system more transparent.” He thinks the state should be “a lot more aggressive” about making information publicly available.
He says providers that do a good job at offering a reasonable price for services should be “rewarded…and given the public recognition they deserve…”
Baker highlights disparities in reimbursements for the same services between Medicare, Medicaid, and private payers, which are known to those within the health care system, but not the general public. “The more sunshine the better. If everybody looks at [this issue] and says we’re fine with it, that’s one thing. But that ought to be something the people are made aware of.”
Question 3: More than a dozen state agencies have a role in health care. Is there an opportunity to consolidate or rationalize them?
Baker is critical of the state’s approach to addressing healthcare issues, saying: “…when we have a problem, we create a new agency.” He believes this approach has the effect of “fragmenting a lot of the decision-making, a lot of the data collection, and a lot of the regulatory activity across multiple agencies.”
Baker says that this leads to conflicting regulatory directions coming from multiple agencies.
He says “there is a big opportunity, to rationalize the way the state works with, and relates to, all the players in the system.”
Question 4: Government policy has encouraged adoption of electronic medical records. However many providers complain about the systems and the benefits have been slow to materialize. Should state government play a role in helping to realize the promise of health information technology?
Baker says the most important role the government can play in this area is requiring provider organizations to use interoperable technology for electronic medical records.
He says the trend has been to develop closed systems that work within providers, but “don’t connect and communicate with anybody else’s system.”
Baker states: “Electronic medical records need to be able to share data with other provider organizations”, and he believes that patients should not be “responsible for owning and carrying around their medical records from…provider to provider.”
Question 5: Hepatitis C is 3 or 4 times more common than HIV. New drugs that can cure the infection are coming on the market this year but they are very expensive. What role should the state play in ensuring that residents are tested, linked to care, and have access to these new medications?
Baker says: “it depends on facts that I don’t believe are currently available to us.” Once more information is collected the state can develop conclusions about best practices using models that have been proven to work in other areas.
He cites his experience in state government, especially the development of strong community-based networks to ensure universal access to vaccines for children. For Hepatitis C, he would “develop a delivery strategy that builds on some of the successes we’ve had with joint efforts with the provider community and the plans before.”
Question 6: There are multiple health care related ballot questions. What are your thoughts about them?
[Note, these ballot questions were withdrawn this summer after the legislature took action.]
Baker says he believes the state “has capacity to create more transparency,” but indicates that he needs to spend more time to get a better understanding on what the state has the ability to accomplish, and whether a ballot question is the best route to address transparency in hospital financial reporting.
On nurse staffing ratios, Baker says “there’s nobody who likes, admires, and appreciates nurses more than me.” When he was in state government he pursued a number of initiatives to help nurses “significantly broaden their portfolio with respect to what they were able and capable of doing under existing and proposed state law and regulation.”
He states that before making a decision on the ballot question, he would seek input from the nursing community, so that his actions don’t “freeze in place the notion that we absolutely, positively, know and understand what it is we think nurses should be doing…”
Question 7: How did your experience as CEO of Harvard Pilgrim Health Care prepare you to be Governor?
Baker says his eight years working in state government and his ten years as CEO of Harvard Pilgrim Health Care give him unique qualifications.
He describes two major things he learned from his past work:
“You have to be able to create a culture of accountability. Set the bar high, hire really good people, and work with the people you have.” But he states that the most important move is to “come up with metrics and ways to monitor performance, and then expect people to perform and achieve to that level.”
The second thing is to create “a real culture of service.” This, he says, is why “Harvard Pilgrim went from receivership to number one in the country for member satisfaction when I was there.” Baker says: “I would like to bring that same maniacal approach to dramatically enhancing and improving the state’s ability to think about service and to deliver service on behalf of the people of the Commonwealth”.
Baker continues: “I would very much like to have the chance to turn Massachusetts into a national model around its ability to deliver a high quality service experience for everybody; people who are looking to get permits, people who are looking to get questions answered, people who are looking for guidance with respect to regulatory policy, and all the rest. “
Question 8: Much of the emphasis in health care reform is on adult patients. Is there a need for a specific focus on children’s health?
Baker says: “Massachusetts has done a good job of covering both its adults and its kids, but I worry about the impact these federal reform laws are going to have on the ability to continue the things that have worked here. And I have been disappointed by the inability of the Health Connector to get anything done, and to work for the people who need to rely on the Connector to get their coverage.”
He continues: “I’m a huge believer in expanding the capacity and support for primary care. That includes pediatrics, which I think is an area that has been neglected by the healthcare system over the course of the past decade or so.”
Question 9: Is there anything you’d like to add?
“I bring a unique blend of public and private sector experience to this job. I’ve been able to demonstrate my capacity to lead and to succeed as a manager and as a leader in healthcare over the course of the past 20 years. I think that’s a really important area for us as we go forward as a state, not just in terms of quality and cost, but also as a major employer and a major source of innovation and entrepreneurship in Massachusetts.”
”I’m a big believer in discipline and focus. I will bring an aggressive approach to making sure the state’s assets are well-managed, if people choose to give me the opportunity to serve as their Governor in 2015 and beyond.”
The mud-slinging continues in the campaign for Governor of Massachusetts. This time Democrat Martha Coakley is attacking Republican Charlie Baker for outsourcing jobs when he was CEO of Harvard Pilgrim Health Care back in 1999. This is on top of the previous accusations of “raising premiums, cutting coverage for seniors, and tripling his own salary to $1.7 million.”
It’s an unfair attack. Baker should be praised instead.
Harvard Pilgrim’s IT systems were a mess in the 90s. They couldn’t pay claims in an accurate or timely manner, and as a result the company couldn’t figure out if it was making or losing money. As it turned out they were losing, and on their way to bankruptcy. Baker stepped in and righted the ship.
Outsourcing to Perot was a good move. Perot hired the existing Harvard Pilgrim IT staff in Massachusetts. In 2006, Perot hired about 200 employees in India to serve the account. Apparently this is the basis for the Coakley attack, but it’s a pretty weak one.
It’s not Harvard Pilgrim’s job to boost employment in Massachusetts. Instead the primary goal should be to deliver excellent service and value to customers. They seem to have done a good job, since they consistently rate at or near the top of the best health plans in the US.
I assume the Coakley campaign knows that the allegations about raising premiums are not to be taken seriously. Health plans have been raising prices forever –there’s no reason to single Baker out for that. And Coakley would like us to believe that Baker cut benefits for the elderly, making him sound like Paul Ryan taking a knife to Medicare. The reality is much less exciting and newsworthy. And sure Baker got a big salary boost, which is a pretty modest reward for rescuing a major company. If it had been a for-profit company you can bet the rewards would have been a heck of a lot bigger.
Baker isn’t perfect. But attacks on his competence and wisdom as a healthcare leader deserve to backfire.