North by Northwest Misdirection

It may be worthwhile to deconstruct this section of a recent Boston Globe story by Rob Weisman about the acquisition of two for-profit hospitals by Cerberus Capital Management. You will recall that Cerberus recently took over nonprofit Caritas Christi Health Care last month and converted it to a for-profit business.

I have discussed below the potential for misdirection in press statements about the Cerberus system. Are we seeing it again? Is a system that is reportedly under review for anti-trust issues using this news item as argument against those possible concerns?

But Peter K. Markell, vice president of finance at Partners HealthCare System Inc., the Boston parent of Massachusetts General Hospital and Brigham and Women’s Hospital, said Steward could offer more competition for downtown teaching hospitals if de la Torre is successful in stemming the leakage of patients from Eastern Massachusetts communities to Boston.

Markell said that Mass. General and Brigham and Women’s are also community hospitals for residents in and around Boston.

If the Steward network draws away routine health care services, it could drive up the cost of the more complex medical care offered at Partners hospitals, he warned.

“Any competition is always a threat,’’ Markell said.

How does ownership by Cerberus make the competition vis-a-vis the Partners hospitals more real? Is there an indication that there is currently a large outflow of routine (as opposed to tertiary) care from these two community hospitals to Boston and specifically to MGH and the Brigham?

The two hospitals, Merrimack Valley and Nashoba Valley, are in Haverhill and Ayer, respectively. The former is 26 miles north of Boston. This takes 43 minutes to traverse in average traffic, along a route that never has average traffic. (See map to the right.) The latter is 29 miles northwest of Boston, with a travel time of just over an hour in average traffic, along a highway that most people would rather avoid. (See map below.) It is hard to imagine that the residents of these communities are opting to go to Boston for most secondary care that can be treated locally.

Perhaps Partners is suggesting that such tertiary referrals as will be sent to Boston will now go to the Cerberus-owned St. Elizabeth's Medical Center, rather than the Partners hospitals. Maybe to some extent. But the jury is still out on that front.

For example, to the extent there are currently referrals from Nashoba Valley, they are just as likely to go to U. Mass. Memorial Medical Center in Worcester, 24 miles away, and 41 minutes on lightly traveled roads. (See map to the right.) Some other referrals also come to BIDMC. If Cerberus succeeds in diverting those referrals to St. Elizabeth's, that is not a shift in market share away from Partners.

But the really surprising quote is this one: If the Steward network draws away routine health care services, it could drive up the cost of the more complex medical care offered at Partners hospitals.

Is this a suggestion that secondary care subsidizes tertiary care in the Partners system? I have never seen data from other tertiary hospitals that would support the proposition that low acuity care is more profitable than high acuity care. On the other hand, perhaps the differential in insurance payments that Partners receives offers benefits along these lines that are not representative of other hospitals. As always, a transparent presentation of such data would help evaluate whether the statements made in this story are valid.

In any event, isn't the whole point of current public policy to deliver the right care in the right setting? If Cerberus is truly able to make it more attractive for low acuity patients to be served in a lower-cost community setting, that would seem like the right thing to do.