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Wednesday, September 14, 2011

UPMC/Highmark: Picking the Biggest Loser

Posted By on Wed, Sep 14, 2011 at 3:54 PM

One of the problems with the UPMC/Highmark dispute, obviously, is deciding which side to detest more. It was clearly a problem for the 300 folks who showed up at Soldiers and Sailors Hall Sept. 8, where they gathered for a town hall meeting convened by state Sen. Jim Ferlo (D-Blogspot). 

The meeting's "plague on both your houses" tone was best summarized by community leader Aggie Brose.  After hearing representatives from both Highmark and UPMC present their sides of the argument, she said, "I'm just in complete awe that you are our healthcare providers. Shame on you." 

By evening's end, it wasn't any clearer who has more to be ashamed of. But you can say, I think, that UPMC is the more likely scapegoat for what's wrong with healthcare today.

At issue, of course, was what Ferlo called "a very ugly divorce" brewing between the health giants. Highmark has announced plans to acquire the teetering West Penn Allegheny Health System (WPAHS), the long-suffering, weaker rival to the UPMC juggernaut. UPMC, for its part, contends that if Highmark is going to compete with its own hosptials, UPMC will no longer accept Highmark subscribers, forcing them to pay higher "out of network" costs. Or get another insurer.

Both sides made presentations, but I'll skip Highmark's. For one thing, it was really boring. For another, Highmark has the easier case to make. The long-resented insurer is taking one of the few actions anyone has approved of: By acquiring WPAHS, it is keeping hospitals open and hundreds of healthcare workers employed. Even Ferlo -- who repeatedly referred to Highmark as "the behemoth" during the proceedings -- supports its acquisition of WPAHS. 

Conversely, UPMC's position will limit access for Highmark subscribers -- the hospital chain is doubling down on being dislikable. So their presentation was much more interesting to watch ... especially because they're still trying to convince us they're our pals. 

Tom McGough, UPMC's general counsel,  began his presentation with a series of questions designed, in the best lawyerly fashion, to lead the audience to a predetermined conclusion. He began by asking for a show of hands from all those who felt insurance prices were too high. From there, he invited the crowd to weigh in on whether he thought competition would bring down those premiums. And finally, he asked: "How many people believe that if [those competitors] ... struck an agreement, the results of that agreement will be lower healthcare costs."

Thus did McGough seek to turn the issue on its head, suggesting that an agreement between UPMC and Highmark would be monopolistic. And monopolies, as we all know, are bad. 

Ordinarily, this would have been a clever argument. Ferlo's event attracted a lot of single-payer advocates -- they still had signs, God bless 'em -- who of course are predisposed to be suspicious of corporate power. And McGough was inviting them to imagine a smoke-filled room in which these healthcare giants would greedily conspire to ... to ... well, to do what, exactly?

"We can't know!" shouted out one audience member when McGough asked about what would happen to costs should the behemoths conspire. 

Because after all, what's the worst they could do? Raise rates? We're used to that by now. How about forcing some large percentage of us to risk losing our doctors? That's what UPMC is pushing for now.

McGough has tried making a similarly tough case elsewhere. In testimony before a state House committee last month, he warned that even if Highmark had a contract with UPMC, it would dissuade patients from using UPMC doctors. Instead, he warned, Highmark "can create the illusion of 'choice' for its subscribers while pushing them, in ways both subtle and unsubtle, into its integrated system" of WPAHS hospitals. Apparently, UPMC prefers to deny access to Highmark subscribers right off the bat. I'm sure you can see why that's an improvement. I mean, at least you can't accuse it of being "subtle."

Suspicion of Highmark would, of course, be natural. But part of UPMC's problem is this: It's trying to insist that consumers would suffer if it worked alongside Highmark ... even though it has done precisely that for many years. 

At Ferlo's event, for example, McGough kvetched about the massive cash reserve that Highmark had been able to build up. That cash reserve, after all, is what Highmark will be using to finance the WPAHS acquisition. Then again ... Highmark ALSO previously used its cash to help UPMC build its sparkly new Children's Hospital. You didn't hear UPMC complaining about big cash reserves back then, did you?

What's happening here is obvious. Both UPMC and Highmark have benefited mightily from the relationship they maintained all these years. Now the rules are changing, and UPMC suddenly wants us to blame Highmark for our discontent ... while UPMC is busily insisting that it's on our side.

The most laughable moment at Ferlo's gathering, in fact, came when McGough -- in a transparent bid to pander to a left-leaning crowd -- said that UPMC head Jeffrey Romoff supports single-payer healthcare. 

"Is Highmark in favor of single-payer?" he asked, with a slight sneer. 

Well, obviously not. And on some level, it would make sense for Romoff to champion single-payer. Dealing with a single government insurer would reduce paperwork, for one thing. And a government insurer could be great for a big hospital chain ... just as the Pentagon is great for Lockheed-Martin.

But funnily enough, I don't recall seeing Jeff Romoff at rallies for single-payer. (It's not like he hasn't had the opportunity: Single-payer advocates have held protests conveniently close to his office.) He clearly hasn't been leaning on UPMC's erstwhile lobbyist, Jason Altmire, to back it.

In any case, UPMC is doing the opposite of championing single-payer these days. Instead, it has committed itself to the idea that competition is the answer. In fact, UPMC officials have actually made a show of praising Highmark's plans to acquire WPAHS, "welcoming" Highmark as a competitor while refusing to do business with it. That's been the approach for awhile now, as McGough himself made clear in a June Post-Gazette op-ed.  In August, Romoff himself told state legislators that "Highmark is the only regional organization with the billions of dollars available in premium reserves required to sustain" WPAHS -- and thus the "competition and innovation" it provides.

A number of objections could be made to the free-market approach to healthcare. Among them is one I've made before: A sizable number of healthcare consumers don't get to choose their insurer; their employer makes that choice for them.  Which is why all this talk of giving people "choice" remains problematic.

So we end up with a parody of free-market rhetoric. 

On the one hand, UPMC is claiming that competition is a great thing for healthcare ... which would lead one to think Highmark is doing a great thing by entering the market.  But precisely because Highmark took this noble step, its customers must be punished -- by risking the loss of in-network access to their doctor. 

To use a medical metaphor: According to UPMC, competition is the lifeblood of the healthcare industry. WPAHS needed a transfusion to survive, and Highmark was the only suitable donor. So now that it seems the patient may survive, UPMC will try to kill off the donor instead.

I think I can understand why that makes sense to Jeff Romoff. It's still not clear, though, why it makes sense for anyone else. 

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