January 4, 2021

Beacon a lesson for hospital merger

As prospects for a merger between Rhode Island’s two hospital systems appear to grow more promising (“Lifespan, CNE Move Forward With Letter of Intent to Merge,” PBN, Sept. 9), there are important questions of monopoly and potential abuse of market power that deserve discussion. Health care is an arena of our economy less suited to dog-eat-dog competition and more suited to policy, structure and coordination than almost any other. After all, a person who arrives unconscious at a hospital is hardly able to make an informed decision about complicated questions of cost and care as they would in a true marketplace. And if the alternative to this merger is control of our major hospitals passing to out-of-state entities, policymaking will be more difficult and we will sacrifice local control. Those are dangers to be avoided.

As a member of Gov. Bruce Sundlun’s administration in the 1990s, I had a role in founding The Beacon Mutual Insurance Co., which was given a complete monopoly on workers’ compensation insurance in Rhode Island. Any discussion of monopoly power in Rhode Island health care should consider Beacon’s example. One of the major elements of workers’ comp is health care for work-related illnesses and injuries, so there is relevance.

The reason for the monopoly was crisis: rates were already among the highest in the country; a 55% rate increase had been approved on top of that; companies left Rhode Island for other states, citing workers’ compensation costs; the business community was in an uproar. When Gov. Sundlun put a stop to any additional rate increases, every insurer announced their departure from Rhode Island. The state created Beacon Mutual as the centerpiece of our reform solution, and alone took over the whole market.

It worked pretty well. No significant benefits were cut. Costs crested and began to fall. Fewer injuries occurred. Quality of care improved. Injured workers returned to work sooner. Cases moved more rapidly and predictably. By 10 years out, costs had fallen 50% from the bad old days, and everyone was happy. Workers’ compensation – which had occasioned angry torch-lit marches on the Statehouse – became a political nonissue (When was the last time you heard about it?). The situation improved so much that insurers petitioned to come back to Rhode Island, and the market returned.

Behind this success story was an acrid history of political warfare and mistrust between labor and management. One of the ways we resolved that history was by making a broad-based public board for the new organization, with leading representatives of labor and management as the vice chair and chair. The remaining members were a mix of union representatives, businesspeople and leaders from the public interest sector. All were respected leaders, and all had shown good faith, knowledge and skill in the hotly fought reform negotiations.

The board’s sense of mission and of a larger community purpose offset the monopoly dangers. The “Team of Rivals” was created to keep an eye on each other, and to make progress. And they did. At the end of the day, Beacon’s monopoly power proved to be an asset, helping improve and reform workers’ compensation and its vital health care component.

The lesson here for a new hospital entity combining Care New England Health System and Lifespan Corp. is that broad and public leadership via a board rich with diverse stakeholders can turn what looks like a risk into an asset. A broad-based public board could have members representing doctors and nurses, labor unions, health insurers, underserved communities, businesses and policy leaders. Any combined entity will be supervised by the R.I. Department of Health, which could be given the right to attend board meetings. The attorney general will oversee any new entity as a charitable organization, and could have similar access. A separate Health Care Reform Advisory Board could be created to broaden and reinforce the outreach, similar to the Workers Compensation Advisory Board we set up for Beacon.

With a well-rounded board, the dangers of monopoly can be abated, and we can steer Rhode Island to a better health care future. Beacon Mutual is not an exact model to duplicate, but it is a signal of how to look at the health care market-power issue through oversight founded in inclusivity and public-mindedness.

Rhode Island has many of the building blocks of a successful health care system. The Rhode Island Quality Institute runs CurrentCare, one of the best statewide health information exchanges in the country, making our care better, safer and more efficient. Our All-Payer Claims Database provides unique research and public health opportunities. Two of the country’s best accountable care organizations are here: Coastal Medical Inc. and Integra Community Care Network LLC; both are lowering costs by improving health results. The move away from rote “fee-for-service” medicine and toward dynamic quality of care is underway, championed both by Neighborhood Health Plan of Rhode Island and Blue Cross & Blue Shield of Rhode Island. In Brown University, we have world-class public health and medical schools eager to lend their expertise.

With the possibility of a new hospital system guided by a broad-based board, we have an opportunity to build on the progress we’ve made and fashion a health care system that is all Rhode Islanders deserve it to be.

By: Sheldon Whitehouse