Category Archives: Policy and politics

Nonprofit CEO compensation: Much ado about not much

The Sunday Boston Globe (Leading nonprofit jobs hold big perks) was as predictable as it was misguided. Here’s the juicy lead:

They are not only well-paid, but many receive an array of generous perks — housing allowances, home loans, club dues, and free travel for spouses. One was awarded a quarter-million dollars in retention bonuses. Another is reimbursed for his children’s college tuition.

Exhibit A is the president of the Museum of Science. He’s the one who’s reimbursed for his kids’ tuition. But wait, it turns out he worked for 10 years as a dean at Tufts, where free tuition is a standard part of the package, and the MoS simply matched this perk to lure him away. His whole compensation of $509,000 includes two tuitions plus a gross-up to cover the taxes. That benefit will end once his daughters are done with school.

I’m not afraid to say it: Mid-to-high six-figure compensation is not too high for leaders of large nonprofits such as the Museum of Science, Museum of Fine Arts and the Boston Symphony Orchestra. And it makes sense to tailor perks to the needs of the organizations and of the executives.

Many moderately successful, mid-level people in professional services in Boston make as much as these leaders. And many professional services partners, for-profit managers, and entrepreneurs make a lot more. Unlike the non-profit leaders, most folks in the private sector generally do not have their compensation disclosed.

It’s fine to scrutinize compensation packages, but if these are the most egregious examples the Globe could find then I suggest the story did not merit top billing it received.

By healthcare business consultant David E. Williams, president of Health Business Group.


Doctor murdered; Gun legally obtained

A cardiologist was murdered yesterday at the Brigham and Women’s Hospital in Boston by  the son of a former patient.

According to the Boston Globe:

Millbury police Lieutenant Donald Desorcy said Pasceri was properly licensed to possess a firearm. “They are a very good family,” Desorcy said. “Never any problems, as far as we are concerned.”

So he was licensed “properly” according to our laws. The gun also worked “properly” as intended by its manufacturer and owner. If the shooter had been a member of “a well regulated Militia” defending the State, that would be one thing. But of course it’s not the case.

The folly of high deductible health plans

Now that's what I call value-based pricing!

Now that’s what I call value-based pricing!

They used to call high deductible health plans “consumer-directed” plans. That was before people realized there is nothing particularly consumer driven about them. A recent poll –not the first of its kind– shows that people with high deductible plans tend to forego care. In fact they skip both unneeded and needed care. Most people don’t like the plans so much when they get sick.

Naturally the current negativity about high deductible plans is mixed up with discussion of the Affordable Care Act, aka ObamaCare. The lowest tier Bronze plans have cheap premiums but high deductibles. This very typical article on the subject (Skipped Care A Side Effect Of High-Deductible Health Plans) from the Seattle Times comes complete with the requisite Republican representative trashing ObamaCare. What this article and almost all similar ones miss is that low income people should purchase Silver tier plans. Not only will they receive valuable premium subsidies, they’ll also be eligible for cost-sharing subsidies that reduce out-of-pocket costs, thus neutralizing the usual criticism of ObamaCare. (By the way, details like this are why the law has a lot of pages in it.)

In the private sector things are different and worse. Employers that offer high-deductible plans are effectively penalizing their low wage employees and rewarding those with high incomes. That’s because those with limited incomes are more sensitive to the high out of pocket costs. They’ll self-ration and hold overall medical expenses down. Meanwhile, high wage employees won’t be nearly so affected. High income people I know who have high deductible plans just don’t think hard about avoiding the out-of-pocket payments. Their premiums will be lower than they should be because utilization is held down among the lower wage folks on the same plan.

Meanwhile, the high deductible plans are totally ineffective at cost containment once the relatively low out-of-pocket maximums are reached. For example, anyone having even minor surgery will blow right through the maximums and have no incentive to keep a lid on costs after that.

A better approach would be to offer policies that reward patients for using efficient providers and provide a premium rebate to those who do.

photo credit: theamericanroadside via photopin cc

By healthcare business consultant David E. Williams, president of Health Business Group.


Hepatitis C drug battle: I’m quoted

The chess game among Gilead, AbbVie, pharmaceutical benefit managers and health plans on expensive but effective Hepatitis C treatments is well underway. I’ve been following the story for quite a while –and asked all of the candidates for Massachusetts Governor about it a year ago.

Now I’m being interviewed about it, most recently for AIS’s Health Plan Week (Health Plans Join in Action as PBMs Make Exclusive Deals for Competing Hep C drugs). The publication is behind a firewall but includes my skepticism that Express Scripts will accomplish very much with its tough stance.

I’m expecting to be quoted in other articles soon, and may write about the topic later this week.

By healthcare business consultant David E. Williams, president of Health Business Group.

Small ball with no leverage: GOP’s 40-hour workweek folly

The allure of 40

The allure of 40

The Cato Institute’s Michael F. Cannon is a foe of the Affordable Care Act, which means I disagree with him most of the time. But he’s right on the money with his ten-point teardown of the Republican Congress’ first salvo against Obamacare.

The bill would redefine a full-time worker as someone who works 40 hours per week, rather than 30. That makes it easier for employers to meet the mandate to offer health insurance to full-time workers. It’s essentially a loosening of the mandate, which will benefit low-wage service companies.

Cannon thinks this move is a bad idea. I strongly agree with his first and last points:

  • The legislation would increase government spending by pushing more people onto the exchanges and Medicaid
  • It would create an incentive to reduce employees’ hours to just under 40 per week. A whole ton of people would be affected by that maneuver; orders of magnitude more than the number near the current 30 hour threshold

His other eight points are about why the 40-hour bill weakens the overall Republican attempt to dump Obamacare. (At one point he writes, “House Republicans are playing small ball with no leverage. How is that strategically smart?”) I agree with his analysis, but unlike him I’m not bothered that the GOP continues to flail.

photo credit: quinn.anya via photopin cc

By healthcare business consultant David E. Williams, president of Health Business Group.


California law prevents price-gouging of the uninsured

Hospital bills add up fast

Hospital bills add up fast

Medical bills are a major source of personal bankruptcy in the US. One reason is that hospitals typically bill uninsured patients wildly inflated “charges.” These prices are often double or triple the negotiated rates that insurance companies pay or that Medicare pays for the same services.

Historically hospitals defended this practice, claiming they needed high prices to compensate for the fact that few uninsured pay their bills, or even claiming to be prohibited from discounting to those who lacked a contract. There’s some truth to the first claim, yet the punishment fell upon those conscientious folks who actually tried to pay what they were billed.

As a new Health Affairs article (California’s Hospital Fair Pricing Act Reduced The Prices Actually Paid By Uninsured Patients) states:

“The pricing policies of US hospitals leave the most vulnerable patients least protected from high medical bills.”

California passed a comprehensive law to address this issue in 2006, effectively capping prices for moderate income uninsured patients at Medicare rates. According to the author’s analysis, the impact has been substantial. Hospitals have reduced their prices to the uninsured; low to moderate income patients have benefited.

The findings are important, because while the federal Affordable Care Act also addresses the issue of pricing to the uninsured, its provisions are much weaker. For example, nonprofit hospitals have the discretion to determine who is eligible for discounted charges and for-profit hospitals are exempted from the requirements.

My own view is that it’s especially important to regulate prices that are charged to uninsured people who are not covered by the ACA, such as undocumented immigrants.

I have less sympathy for those who are eligible for coverage but choose to remain uninsured. Ironically, the threat of ruinous hospital bills could be just what we need to encourage everyone to sign up for coverage.

photo credit: urbanbohemian via photopin cc

By healthcare business consultant David E. Williams, president of Health Business Group.