Category Archives: Hospitals

Tufts nursing impasse: I’m quoted in the Boston Globe

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Who “wins” in a strike?

The first nursing strike in Boston in three decades is an ugly situation. I feel badly about it, especially for patients and their families who are collateral damage. Even if the quality of care is the same with the replacement nurses, the extra stress and aggravation really are a problem.

I’m quoted on the dispute in today’s front page Boston Globe story (At Tufts Medical Center, pressure to cut costs in a city rich with hospitals). I’m not directly involved with Tufts management or nursing leadership, so I commented on the overall environment in which its occurring.

“I think the root cause is that Tufts has to compete with the other academic medical centers in the city, and they don’t get the same level of reimbursement,” said David E. Williams, a consultant at Health Business Group in Boston. “The disparities of the payments actually cause friction in the labor market.”

The story of unequal payments to Boston area hospitals is not a new one, and people have heard about it so often that they’ve tended to zone out. But this is the first time I can think of that labor relations have taken a public hit as a result, so perhaps it will reinvigorate the debate.

Meanwhile, few of the articles about the strike provide broader context about where nurses fit in to hospital finances. A couple of statistics are worth mentioning:

  • A 2015 study published in the Journal of Nursing Administration (Hospital Nursing Workforce Costs, Wages, Occupational Mix, and Resource Utilizationconcluded that nursing labor accounts for just over 30 percent of total hospital costs. That means nursing costs are central to hospital finances and it explains why Tufts isn’t just giving in in the face of the strike.
  • Nurses in Boston earn six-figure incomes. According to Tufts, its senior nurses (which represent 60 percent of the total staff) “earned an average of $152,000 in 2016.” That’s comparable to what some primary care physicians make.

I hope the dispute is resolved soon, so that the nurses and the rest of the Tufts team can get on with the job of caring for patients. If the strike ends up stimulating a serious debate about inequities in hospital reimbursement, that will be its only silver lining.

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

Steward buys IASIS. I’m quoted in the Boston Globe

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Steward Health Care is taking control of IASIS Healthcare, which owns 18 hospitals in Western and Southern states. This deal follows on the heals of Steward’s purchase of eight hospitals in the midwest and Florida a few weeks ago.

Here’s what I told the Boston Globe (Steward merger would make it nation’s biggest private for-profit hospital system):

Some health industry analysts said the company has been ahead of others in investing in so-called accountable care.

The business model relies on payment contracts with insurers that are designed to encourage cost-efficient care, replacing the traditional fee-for-service model, which critics believe promotes unwarranted use of medical services.

“Steward is essentially betting that it can apply its model of accountable care and cost containment to a hospital system in other geographies,” said David E. Williams, president of the Boston consulting firm Health Business Group.

“This is a very interesting contrast with some of the mergers and acquisitions undertaken by the other major hospital systems in Massachusetts. While others have focused on bulking up to increase their market power over local health plans — which can drive up costs overall — the Steward/IASIS arrangement poses no such concerns,” he said.

As a scrappy, lower cost –and private equity owned!– community based system, Steward isn’t popular with the big, academic-based health systems in Massachusetts. Those systems may actually breathe a sigh of relief to see Steward turn its sights out of state.

There is some irony, though, that while the academics’ idea of innovation is to band together to maximize local market power and beat up on health plans, Steward is applying its expertise out of state, where it expects to improve the efficiency and effectiveness of the acquired assets. Brass knuckles style market power approaches are not part of Steward’s expansion playbook.

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

Urgent care clinics just for cancer patients

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It’s tough being a cancer patient. The illness is serious and sometimes fatal, treatments can have serious side effects, and the fatigue and stress can be overwhelming. It gets worse when patients end up in the emergency room where they are exposed to people who may be contagious and encounter medical staff who may not know how to address the special needs of an oncology patient.

So I was heartened to read about urgent care centers specifically for cancer patients. Centers like the one at University of Texas Southwestern Medical Center in Dallas cater to the requirements of cancer patients. They provide same-day appointments, are open early and late, and coordinate with the rest of the patient’s oncology care givers. It’s a good example of patient-centered care.

Of course there are some strong economic incentives as well (hospitals aren’t doing this for their health, so to speak). Cancer patients are lucrative for hospitals –that’s one reason you hear so much advertising for cancer care. And hospitals are wise to treat their best customers well to encourage loyalty. In the value-based care era, we can also expect pressure for hospitals to improve outcomes, control costs and improve the patient experience of care. Urgent care cancer centers contribute to addressing all these goals.

It does raise the question of why only cancer patients get their own urgent care while the rest of the population has to put up with all the challenges and downsides of the regular healthcare system. Perhaps other parts of the healthcare system can learn from these urgent care centers and emulate them more broadly.

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

Partners buys into Rhode Island: I’m quoted in the Boston Globe

Partners HealthCare plans to purchase Care New England in Rhode Island. Not a surprising move, considering  that Partners wants to continue to expand but is running into roadblocks in Massachusetts. Rhode Island is practically down the street.

I’m quoted in the Boston Globe’s coverage (Partners to acquire R.I.’s Care New England)

“This is a logical move for Partners, which has received strong pushback in its recent attempts to expand in Massachusetts, but is less likely to face the same pressures in Rhode Island,” said David E. Williams, the president of Health Business Group, a Boston consultancy. “The acquisition is geographically close to Partners’ existing network, and they already have a clinical collaboration. Rhode Island regulators will likely appreciate Partners’ financial strength and the stability it is likely to promote.”

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

Are Massachusetts healthcare costs ok after all?

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The best defense is a good offense. I assume that’s what Partners HealthCare CEO David Torchiana had in mind when he penned First do no harm in the Boston Globe. In a nutshell, he argues that healthcare costs in Massachusetts are more affordable for businesses and individuals than elsewhere in the country, that they are becoming relatively more affordable, and that the state should resist the urge to impose further cost controls.

I’ve made similar arguments about affordability myself. See for example, Massachusetts: Land of affordable health insurance from back in 2011.

And yet…

While Massachusetts has retained its affordability relative to other states, healthcare is taking up a higher and higher percentage of families’ incomes, including in Massachusetts. Medicaid and other healthcare spending dominates the state government’s spending growth, squeezes out discretionary initiatives for priorities such as education, and necessitates the tough budget cuts Governor Charlie Baker is making.

I’m sure I’m not the only one whose eyebrows were raised by Torchiana’s sanguine perspective.

Partners also should not claim too much credit for the reasonableness of healthcare spending in Massachusetts, considering that its own costs are among the highest. Despite receiving substantially higher reimbursement from commercial payers than other providers and enjoying a richer payer mix, Partners recently reported a record loss of $108 million for the year. Meanwhile, its smaller rivals –including those who treat a higher proportion of Medicaid patients and receive lower commercial reimbursement rates– are reporting better financial results.

If Partners had remained just Massachusetts General Hospital and the Brigham & Women’s Hospital I don’t think its executives and lobbyists would have to expend so much effort fending off the state. Massachusetts residents are justifiably proud of the worldwide reputations of these hospitals, which draw tremendous research dollars from the NIH and elsewhere, attract patients from around the world, and are equipped with the medical expertise and equipment to treat the most complex conditions.

No, the issue is that over the years Partners has dramatically expanded its footprint throughout the region, buying up or partnering with community hospitals and physician practices, and expanding its own overheads as it grapples with the balance between central and devolved management. Partners is now in the business of providing routine care throughout the region, and that helps drive up costs and puts the company in the spotlight. As the state grapples with bringing costs in line with benchmarks, Partners cannot expect to be given a free pass.

So there are a couple of alternatives: #1: Partners can bring its own costs closer in line with rivals or #2 it can divest its community assets and focus on being a great academic medical center. From what I can see, Partners is pursuing a light version of #1 while simultaneously slowing its plans to further expand in the community and mounting a charm and lobbying offensive with the state and the public.

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

BIDMC and Lahey talk merger; I’m quoted

Beth Israel Deaconess Medical Center and Lahey Health are talking again about a merger. From the Boston Globe:

Top executives from the two hospital systems are discussing a possible merger, according to people with direct knowledge of the negotiations, the fourth time they have explored a deal in the past five years.

I’m quoted:

David E. Williams, president of Health Business Group, a Boston consulting firm, said Beth Israel Deaconess has been looking for ways to grow its network since its biggest rivals, Mass. General and Brig-ham, merged in 1994 to create Partners.

“Beth Israel Deaconess never got involved in the original Partners transaction, and ever since then they’ve been looking for a way to get bigger and be stronger like Partners,” he said. “Lahey is a strong, medium-sized player that’s come up time and again.”

From what I understand, this may actually be the fifth set of talks, not the fourth. Both players are high quality and relatively low cost, so a combination could create a strong, efficient alternative to Partners.

But mergers are complex and risky, so there are reasons not to move too fast. In particular, the board and management of each institution has to decide if the specific deal is good for their own organization. In the past that case hasn’t been made convincingly. It’s not clear that it will be any different this time.


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

Boston Children’s gets the go-ahead. I’m quoted

From the Boston Globe (Children’s gets green light for hospital expansion, with conditions)

Massachusetts health regulators said Friday that Boston Children’s Hospital should be allowed to go forward with a $1 billion expansion project, a recommendation that seeks to support one of the state’s premier hospitals without undermining efforts to control medical spending.

The staff at the Department of Public Health recommended approval of the plan to build an 11-story building in Longwood and an eight-story outpatient clinic in Brookline.

Here’s my quote:

“DPH seems to be trying to satisfy everyone here, including taxpayers, health insurers, [Children’s Hospital], and competing hospitals,” said David E. Williams, president of Health Business Group, a Boston consulting firm. “The conditions DPH lays out may help achieve these goals, but it is hard for a government agency to manage the hospital market so tightly.”

Children’s plan to use its expanded capacity to draw patients from out of state and overseas is consistent with the hospital’s overall strategy. DPH appears to accept Childrens’ explanation, but wants assurances that MassHealth patients will not be displaced and that Childrens will not attempt to lure well insured, healthier patients away from local competitors.

Ironically, DPH seems to be fighting the last war. After all it was Partners, not Children’s, that expanded widely within the local market. Meanwhile Children’s big recent acquisition was in New York, New Jersey and Connecticut not Massachusetts.

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