In Whatcom County, Washington, as in other smaller more rural venues, there is one dominant healthcare provider.
PeaceHealth describes itself:
We carry on the healing mission of Jesus Christ by promoting personal and community health, relieving pain and suffering, and treating each person in a loving and caring way.
At PeaceHealth, the fulfillment of our Mission is our shared purpose. It drives all that we are and all that we do. To those who embrace the spirit of these words and our commitment to Exceptional Medicine and Compassionate Care, we offer the opportunity to learn and grow as a member of the PeaceHealth family.
Sounds great and I certainly don’t doubt the dedication of individuals in the PeaceHealth System, but, always a but, it has become a near monopoly.
In the early 90’s Peacehealth bought out the only other hospital in the county and has been the only show in town for hospitalized care. It has had a strategy to dominate the health care in the county. At present they account for over 60% of medical billings (probably higher). They completely own the radiology, pathology, pediatrics, oncology (both radiation therapy and medical oncology) and for the most part internal medicine services for our region. They recently purchased the dominant cardiology practice in Northwest Washington as well.
Shopping for care in the county is impractical as the nearest alternative facility is between 45 minutes and two hours away (depending on where you live in the county).
PeaceHealth maintains it is doing community service by owning these medical facilities and certainly one cannot complain about the quality of care offered. It appears to be quite acceptable.
Peacehealth though appears to be doing well, while doing “good,” As monopolists will do, Peace Health has taken advantage of their control of services to keep costs high and raise them whenever they can. For example, after purchasing the medical oncology service in town the hospital moved the outpatient infusion center into the hospital proper. Patients reported a significant increase in their billings. Similarly with the completion of the purchase of the county’s dominant cardiology provider, many interventions that were previously done outside the hospital were moved into that facility resulting in a dramatic increase in costs.
Medicynical Note: PeaceHealth is a quality provider but a high cost one. It’s practices are not unique as noted in this recent article by Uwe Reinhardt. (“To a man with a hammer, everything looks like a nail.”—even to a “non profit” hospital system)
In December of 2010, the American Health Insurance Plans (AHIP), the national association of private health insurers, published an eye-opening report on the actual prices private insurers paid to hospitals in California and Oregon (American Health Insurance Plans, 2010). Figures 7 and 8 are based on the data in that report.
That hospitals in Oregon were able to raise their prices thus in a period when the US economy was sliding into the deepest recession since the Great Depression in the 1930s is astounding and raises the question why private insurers accepted these price hikes. (Reinhardt, 2011b).
One theory is the one advanced in this paper and elsewhere (Reinhardt, 2011b), namely that in most market areas in the USA, private health insurers have relatively less bargaining power than do hospitals or the larger physician groups. The alternative theory, highly popular among insurers, hospitals, and employers, is that government is the culprit behind the high prices paid by private health insurers (Dobson, 2006). This ‘cost-shift theory’ holds that whenever government insurance programs reduce the ‘reimbursement’ rates (i.e. prices) they pay the providers of care, hospitals shift any shortfall of public ‘reimbursement’ from their cost of treating publicly insured patients (Medicare or Medicaid beneficiaries) to private payers who are made to cover the short fall by being charged higher prices in effect,that the government is indirectly raising taxes on the private sector (Gelfand, 2010). It is assumed to be so even for physicians. Of course, the logical extension of the theory is that large private insurers with more bargaining power also shift costs to smaller insurers with less market clout and to middle-class uninsured Americans who, as noted, often are charged the highest prices.
The “private”market has it’s flaws. Companies at every level compete to gain market dominance, and when they have achieved their goal they take advantage. Guess who pays?