De la Torre backs hospital pricing ballot question

‘The free market is not going to fix this on its own,’ says Steward CEO

RALPH DE LA TORRE, the president and CEO of Steward Health Care, stated unequivocally on Tuesday that he intends to support a union-sponsored ballot question this November that would compress hospital rates and shift income from teaching hospitals such as Massachusetts General and Brigham and Women’s to community hospitals like the ones he operates.

“For now, I’m with the ballot initiative because it’s the only solution out there,” he said. “If someone presents another solution, then I’ll evaluate that. But for right now, I’m having to choose between what may be an imperfect solution and no solution, and we need a solution.”

Steward has previously indicated it would support the ballot campaign, the only major hospital system in the state to do so. But de la Torre himself had not commented. He spoke on Tuesday after a panel discussion at Suffolk University Law School hosted by the state’s Health Policy Commission that focused on ways to help community hospitals survive.

Ralph de la Torre, the president and CEO of Steward Health Care

Ralph de la Torre, the president and CEO of Steward Health Care

During the panel discussion, de la Torre said Steward’s Quincy Medical Center lost $40 million on its operations in the last year before it closed in December 2014. If Quincy had been paid the same rates as Brigham and Women’s, he said, it would have turned a $10 million profit. “That’s all you have to know,” he said.

The Health Policy Commission issued a report recently that said community hospitals across the state generally provide high quality care at very affordable prices. But many community hospitals are losing patients to Boston teaching hospitals such as Massachusetts General and the Brigham that charge significantly more for routine procedures and services. The Health Policy Commission believes the price variation between teaching and community hospitals is not justified by differences in cost or measurable quality and is a contributor to rising health care costs.

The Health Policy Commission report said the exodus of patients from community hospitals to teaching hospitals is leaving the community hospitals with patients covered by government payers, who generally pay less than commercial insurers.

Normand Deschene, the CEO of Lowell General Hospital, said the trend is disturbing. “We are on the verge of creating a two-tier society of haves and have-nots,” he said.

Spiros Hatiras, the president and  CEO of Holyoke Medical Center, said his system has successfully increased its market share by 20 percent but is losing more money than ever because of the low prices it receives for services.

The Health Policy Commission is starting to explore what should be done about the pricing disparity between teaching hospitals and most other hospitals. Stuart Altman, the chairman of the commission, asked panel member Lynn Nicholas, the president and CEO of the Massachusetts Hospital Association, whether she would support insurers charging patients more or requiring them to pay a larger share of the bill if they use a teaching hospital.

“I think that’s what should happen,” Nicholas said, but added that she thought few employers would go along with that approach and risk a backlash from employees. She also said she doubted the state would mandate such an approach. She noted tiering, where patients are charged different rates based on what kind of hospital they use, has failed to gain traction in Massachusetts.

Richard Lord, a member of the Health Policy Commission and the CEO of the business group Associated Industries of Massachusetts, said his organization recently explored tiering and concluded the savings would be minimal. He said AIM did not pursue a tiering option.

Holyoke would benefit financially from the ballot question being sponsored by the Service Employees International Union. But Hatiras, like the other members of the Massachusetts Hospital Association, opposes the ballot question. He would prefer the Legislature address the pricing disparity issue rather than leaving it to a ballot campaign.

De la Torre said he is not a fan of government intervention, but something has to be done.  “We need help. The free market is not going to fix this on its own,” he said.

Meet the Author

Bruce Mohl

Editor, CommonWealth

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

About Bruce Mohl

Bruce Mohl is the editor of CommonWealth magazine. Bruce came to CommonWealth from the Boston Globe, where he spent nearly 30 years in a wide variety of positions covering business and politics. He covered the Massachusetts State House and served as the Globe’s State House bureau chief in the late 1980s. He also reported for the Globe’s Spotlight Team, winning a Loeb award in 1992 for coverage of conflicts of interest in the state’s pension system. He served as the Globe’s political editor in 1994 and went on to cover consumer issues for the newspaper. At CommonWealth, Bruce helped launch the magazine’s website and has written about a wide range of issues with a special focus on politics, tax policy, energy, and gambling. Bruce is a graduate of Ohio Wesleyan University and the Fletcher School of Law and Diplomacy at Tufts University. He lives in Dorchester.

De la Torre declined to say whether Steward will financially support the ballot question. The company recently hired Jeff Hall, the former head of communications for SEIU Local  1199 and one of the architects of the ballot initiative. Hall attended the Health Policy Commission meeting.

Rep. Ronald Mariano, the House majority leader from Quincy, appeared on another panel and said he hoped policymakers could find a way to convince patients to seek out the best care at the lowest price. “Our health care system is like an open bar,” he said. “Everyone’s drinking and no one cares who’s paying.”