Thanks for your letter of response. I appreciate the time and effort that went into it.

I am especially interested in the following statement: “Even when comparing the level of our uninsured patient care to that of the handful of urban hospitals highlighted in your letter, we provided 10 times the average of their combined Uncompensated Care Pool costs.”

Seeing that you have these numbers at hand, I wonder if you would be open to sharing them. It would be good to go back to some of the other urban hospital systems and ask for their view. At the moment, they do have a different take on the justification for special payments to BMC and CHA. Providing the data would perhaps help clarify things for all.

I am less interested in the following statement, as less than artful attempts to cast aspersions on our intentions are frankly tiresome: “It is unfortunate that the Pioneer Institute, despite claims to be a “research institute” has opted to base its flawed arguments more on ideology and rhetoric rather than on a thoughtful examination of this data.”

If we can set aside such rhetoric, I would look forward to engaging with you in this discussion.

With regards, Jim

I received your letter dated August 6, 2008. While I appreciate your recognition of Cambridge Health Alliance’s mission and services, your conclusions on what constitutes adequate funding for our health care system are not supported by published data nor is your simplistic hypothesis that all urban hospitals and health care systems are alike. Moreover, to recommend that our supplemental funding, which is critical to our survival, be redistributed to other health care organizations is a “fair” solution to the current apparent financial crisis relative to healthcare reform suggests that the services we provide to the most vulnerable populations in the Commonwealth are not necessary, and can be readily absorbed by other area providers. Nothing could be further from the truth and our experience. With broader options through new coverage under healthcare reform, patients are making the choice to continue their care with us and are in fact coming to us in greater numbers than before.

We have a long history in collaborating with hospitals across the state, including those that you mention in your letter, and greatly respect the important work of all hospitals in their communities. I also understand the pressures all hospitals are currently under, with operating margins being squeezed very significantly. However, the information you select for uncompensated care costs at area hospitals is inaccurate and inconsistent with actual published data. It would seem fundamental for a public policy research institute to verify the facts before disseminating misleading and erroneous data in publications across the Commonwealth. I think you and your Board of Directors have a special responsibility in this regard if you want to elevate the debate to the important policy implications you raise through your rhetoric.

Based on the last available full year of data (2007), Cambridge Health Alliance provided 34 times the health care to the uninsured compared to the community hospital average (based on Uncompensated Care Pool costs) and 14 times the health care to Medicaid/Commonwealth Care patients compared to the community hospital average. Even when comparing the level of our uninsured patient care to that of the handful of urban hospitals highlighted in your letter, we provided 10 times the average of their combined Uncompensated Care Pool costs. What your statements have failed to recognize is that government programs – whether it be Medicaid or the uninsured – typically pay providers below the costs of health care. That is why both the state and federal governments have designations for disproportionate share hospitals - those hospitals with a high public payer mix - to provide needed financial support in recognition that government programs often do not cover the full health care costs for their beneficiaries. It’s simple math; the greater the amount of care an organization provides to populations served by these programs, the greater the financial shortfall, and the greater concomitant need for additional revenue support. So, you only got part of it right. For our health care system, low-income public programs represent 50% of what we do, while for some area hospital it’s less than 5%.

In addition, Cambridge Health Alliance provided nearly one-third of the inpatient mental health care in the state to the uninsured or 23 times the Massachusetts hospital average (2006). About 57% of the mental health care we provide comes from patients who typically reside well outside of our primary service area, meaning that patients can’t access such care in their own communities or often at the nearest hospital. It is somewhat eye-opening, for example, that CHA provides 16% of all the inpatient psychiatry and substance abuse care to residents of the city of Boston or 6% of such care for the residents of cities as far away as Lowell. As you should know, mental health is poorly reimbursed by public and commercial payers and was excluded from health reform’s efforts to close the Medicaid payment-to-cost gap. This is but one of the reasons that CHA stands apart and has required supplemental funds to support this essential, but poorly reimbursed public good. From a public policy point of view, you might want to ask the question of why these poorly reimbursed services are not in adequate supply in other regions of the State.

There is a great deal of publicly available data to further illustrate these points as well as to help pose the various corresponding public policy and reimbursement alternatives. This is worthwhile for those willing to roll-up their sleeves to address the serious and admittedly complex challenges in today’s health care system. This is an effort to which we are committed and what we believe is actually required in the next phase of health care reform. It is unfortunate that the Pioneer Institute, despite claims to be a “research institute” has opted to base its flawed arguments more on ideology and rhetoric rather than on a thoughtful examination of this data.

Sincerely,
Dennis D. Keefe
Chief Executive Officer
Cambridge Health Alliance