Whatcom County Washington: Health Monopolies and Pricing

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?

6 responses to “Whatcom County Washington: Health Monopolies and Pricing

  1. PeaceHealth St. Joseph medical group has a cost problem and its near monopoly indeed is a significant cause. Medicynic is the only write-up I have seen describing PeaceHealth’s lack of competition and the resulting costs to Whatcom County residents. I greatly appreciate you exposing this fact to people.

    During last year’s negotiation impasse between PeaceHealth and Regence insurance, data from the Hospital Evaluation and Comparison System showed PeaceHealth charged Regence members 27 percent more for care than at similar facilities in Washington. Regence negotiates the lowest rates out of all the insurers in the area, so residents with other insurance companies paid even more for PeaceHealth services. The impasse was resolved, but PeaceHealth most likely continues to be one of the most expensive hospitals of its kind in Washington, owing much to market dominance.

    Studies support the observation that hospital consolidation usually results in price increases. The only solutions I know to reverse hospital monopolies and stop mergers are:
    – Petition the state insurance commissioner (though, they rarely act to control health care costs)
    – Encourage county residents, businesses, and organizations to “Buy Local” from independent medical providers. This will help competing providers stay solvent, and typically they have less expensive services.

    In addition, PeaceHealth needs to start taking many strong actions on their own to contain costs so that citizens can afford to have medical care.

  2. I would like to know if there is a group “fighting” for fair prices. I would like to be part of a group like that that exposes Peace Health for what it is. Three years ago I had to have protyme blood draws often to get my blood coagulation under control. The charges were $39 with my copay of $25, my insurance paid $19. Now, my husband is going through the same process. However, to have a protyme done is now $159. $39 is still for the draw, but now since North Cascade Cardiology was economically forced to become part of Peace Health, the protyme clinic is now under Peace Health “Pharmacy”, who supposedly reads all the test results to make sure the clinicians have done their job properly (the same people are in the clinic drawing the blood and checking protyme now that were there three years ago when I was there) Now that the “Pharmacy” is involved, it is an extra $120, with a total cost to draw blood, have the little machine tell the clinician what the numbers are, and she/he adjust the warfarin accordingly is $159. Because there is a copay for the clinic and a copay for the Phamacy, we are now paying $50 copay instead of $25. I want the community at large to know what Peace Health is doing to our little community here in Whatcom County. I feel I am being gouged and I have no other choices as Peace Health now owns probably closer to 80% of all medical facilities in the county.

    • Even so-called non-profit charitable monopolists can’t resist acting like monopolists. Have you checked out what the portion of the bill your insurer pays, wouldn’t surprise me if it were less than your co-pays.

      There is no organized resistance, that I am aware of, to Peacehealth’s charges.

  3. Since my last posting a year ago, I have found the most promising effort to contain health care prices at the hospital and other provider clinics in Whatcom County is through a local project initiated by the non-profit Whatcom Alliance for Health Advancement (WAHA). I am excited that local leaders are tackling the huge problem of health care by targeting several cost drivers.

    “The Transforming Health Care Project in Whatcom County is an ongoing collaborative effort that includes area providers, insurance plans, business owners, elected officials and community members who are committed to the “triple aim”: improve population health outcomes; enhance the patient experience of care; and reduce the per capita cost. Participants are focused on meaningful system changes that require cooperation and result in greater accountability to each other and the community.”

    The main components are:
    • Care will be organized around person-centered health homes.
    Chronic illnesses would be reduced primarily through better prevention efforts. Over 70% of medical care and premium costs in Whatcom County are due to chronic illnesses. Some counties have brought the cost down to 50%.
    • Communication technology between providers will greatly improve.
    • Physicians, specialists, the hospital, and other providers will receive financial incentives for improved health outcomes and cost reductions. This is a big change from the current fee-for-service/ volume-based payments.

    The majority of primary physicians are on board with the project, which tend to be a progressive group of providers. The payment structures will benefit physicians, yet reduce cost throughout the system. Specialists and PeaceHealth hospital may be slower to adopt all the components, but people are optimistic they will come on board.

    The project description can be found at

    Here is a link to a video of a Town Hall Meeting last January where six local leaders described the project to a couple hundred people. It was a very interesting and informative discussion on local health reform:

    • Thanks for the info. So far it’s all talk. I’ve noted increases in my cardiology bills since Peace Health took over and see few signs that they really give a hoot.

      As Brill noted in his recent Time piece, facilities game patients by inflating their billing to those without insurance and offering deep discounts (more than 50%) to insurers who bargain. The naive patient gets unreasonably high bills which the hospital will often aggressively pursue and then tell -us how generous they are because of all the charity care (based on non-discounted fees) they offer.

      Peacehealth is non-profit in name but is an aggressive monopolist in reality. Not good for our pocketbooks.

      There is a meeting this Saturday (March 15, 2013) 10-12AM at the Bellingham Public Library discussing this topic sponsored by the League of Women voters: “Improving Health Care Quality While Reducing Costs – A Paradigm Shift”.

      • Francie Smart

        I find shock and dismay from everyone at North Cascade Cardiology when I tell them what my bills are like now as compared to just 2.5 years ago when Peace Health them over. Since P. Health also took over all the billing, no one in the offices of NCC actually knows what’s going on. As far as them not caring, I’ve been told some of the docs are considering forming their own medical clinic and treating it much like it was years ago…with many of tests and procedures being done in the clinic, not the hospital. That IS giving a hoot. Everytime (and that is still often) that I go to my cardio

        logist, I tell my doc and the nurses that I sure would like to see a group break away form Peace Helaht.

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