Tuesday, March 28

I Have Been Remiss in not Discussing This

Over the past month or so, we have seen an interesting spectacle unfold in the Tribune over the practice of medicine in our community. Of course, I am discussing the lawsuit that Benefis filed against the Clinic to stop their purchase of a speciality surgical center in Great Falls.

I have been thinking of writing something for a while, and have not had the time to do the subject justice. This post is not the comprehensive analysis I hope to post at a later time; but the subject still cries out for more debate among the community.

For as long as I can remember, the practitioners of medicine in our community have been at loggerheads. The Deaconess and the Columbus always fought with one another. Then, in 1996 they merged (against the wishes of the greater community). The Clinic and the Hospitals (and later the Hospital) have always fought.

In past years, we have seen more of the same. In every case, we see institutional Great Falls medicine trying out anti-competitive tactics to gain advantage over their rivals. Back in the late 90s, the Clinic rolled out an insurance policy with Blue Cross/Blue Shield that effectively bars insured from seeking out care at the Hospital. Most recently, (and in today's news) the Hospital has tried to block the Clinic's purchase of the Poulson Surgery Center.

I can understand why a business would want to damage their competitor. However, as a community we should not be parties to the war. I do not buy the argument that medicine is so different from other businesses that increased competition will increase prices.

Benefis' argument boils down to this: Increased competition for the more "profitable" procedures will decrease the cost of those procedures. At Benefis, those procedures have subsidized other services that the Hospital has operated at a loss (such as the Emergency Room). By reducing the effectiveness of Benefis' profit centers, they will have to increase prices for those other services.

In the short term, Benefis might be right. However, as the price for those services rise, there will be more incentive for other agents to provide those services. Eventually, the market will find a balance where the cost of the service is balanced against the demand for that service. Is that a bad thing?

The other problem with Benefis' argument is that the Surgical Center has been operating in Great Falls for years. This is not a new business. The only thing new is that the Clinic wants to buy that business and operate it. The permit that the Hospital is trying to stop is just a transfer; not a new license.

I hope to write more on this later. However, it is right that Benefis was rebuffed in its suit. The Supreme Court should also turn the Hospital away in its appeal.


Anonymous said...

Great post, TSJ. Competition is good for the masses; monopolies tend not to be.

Here we are told monopolies are good and competition is bad. Who's saying that? Oh yeah, the monopoly.

Pardon my grain of salt.

WolfPack said...

Your analysis misses one part of the problem. The emergency room operates at a loss because it is used by the poor for primary care. Raising the price for services that are not paid for will not bring any competitors to the market. I thought I read in the trib a while back that the ER writes off about 40% of it’s services. I have to agree with Benefis that the Clinic is just trying to capitalize on it’s doctor monopoly while complaining about Benefis’s hospital monopoly. The problem is how do we pay for the ER services Benefis is forced to provide without compensation. A bed tax for all hospital beds?

Anonymous said...

Bed tax? Give me a break.

Benefis 'netted' about 11,000,000.00 in '04. They'll do alright.

Maybe they might want to have a family practice doctor on staff, available 24 hours a day. Then when the poor people go to the emergency room for the sniffles, they can be routed to the family practice guy?

Treasure State Jew said...


Benefis is a non-profit corporation. The Clinic is not. In other words, the Clinic has to pay income taxes on any profit they make. Benefis gets to keep every penny.

For that non-profit status, they should be performing some sort of public service. The Emergency Room might well be that service.

If you net the cost of the amount that Benefis has to write off for serving non-insureds in the ER with the cost of the income tax they would have had to pay on the profit (or whatever they want to call it) they booked, I would bet you that Benefis still comes out ahead.

WolfPack said...

A non-profit is defined as such because there is no profit (it's all reinvested for the public good in theory) so the amount of tax they are skipping on is limited. Taxes aside, I don't see reducing the quality of emergency treatment so the GF Clinic can capitalize on it's near doctor monopoly. The hospital in question is already here so the completion argument is limited. I'm not a big fan of Benefis or the merger that spawned them. I am also not a fan of the physician owned GF Clinic. I have been in the position where an ethical clinic doctor told me to have my sons MRI tests done at Benefis because of the antiquated Clinic equipment. A year before a Clinic doctor sent me to the Clinic for the same MRI test with no warnings that the Clinics equipment was less sensitive. I'm glad my son got the best but given the choice I might have chosen the same for myself. My doctor however profited from my second tier treatment by keeping things inside the Clinic. Physician owned is my biggest problem with this issue. Do you want to wonder what is motivating your doctor when he/she is setting up a hospital for your surgery?

Anonymous said...

As opposed to all those saintly MBA's running Benefis, Wolfpack?

And I think you miss the point of a not for profit. Benefis may not have had a "profit," but their revenue exceeded their expenses by $11,000,000.00.

WolfPack said...

That $11 mil was not issued as dividends. It's still available to be used for expansion or other patient services. If we transfer that profit to the GF Clinic it goes out as dividends to the physicians. How again does this help us patients? What were the profits/dividends of the GF Clinic, $1mil…$5mil…$20mil who knows other than the partners of the Clinic. As with Benefis it really doesn’t matter unless jealousy is driving your arguments. Even Benefis’s $11mil means little if their cash flow is negative (not considering donations) and it might very well be with all the expansion. Again, I have no problem with a second hospital, it’s already here. I just don’t like the idea of the GF clinic owning it and using their unique position to cherry pick out the paying customers.

Anonymous said...

I know it won't all go there, but human nature being what it is I'll bet Benefis management wants at least some of the $11,000,000.00 in their own pockets!

And their cash flow is not negative. In fact, the $11,000,000.00 understates their margin, because it includes non-cash expenses such as depreciation.

As far as the cherry pick argument is concerned, there's no evidence of that other than the breathless speculation of Benefis management. And we're supposed to assume that the MBAs running the hospital are saintly, concerned only with patient care, but the doctors, who take an oath to put the patient first, only care about money? I'll put my health care in the hands of a doctor over a bean-counter any day of the week, no offense TSJ.

Treasure State Jew said...

When it comes down to it, this case shows the sorry state of the business of medicine here. One thing that has to be said: my family and I have received excellent care at both the Clinic and at Benefis.

I actually think that this argument has little to do with quality. The docs in Great Falls are very good, and the care is very good. What this case is about is money, plain and simple.

Do I distrust a Clinic doc just because he has a financial stake in the operation there? Not really. I have never seen a doctor do that. However, do I distrust the MontanaCare system, which effectively bars me from seeking out general care anywhere but the Clinic? Yes, I certainly distrust that system.

As for the specialty hospital in question; it has been operating for years. How will allowing its license to be tranferred to the Clinic suddenly cause Benefis such a detrimental harm? It has been busily seeing patients all this while; and Benefis made the same arguments when it was being built.

At the end of the day, neither the Clinc nor Benefis has the right to wear a white hat in this town. Neither should be forced to wear a black hat, either. However, in this particular situation I think that the Clinic's hat is a slightly lighter shade of gray than is Benefis'.

Anonymous said...

Not to mention, could, should or would, but the fact is that what the Clinic did is apparently perfectly legal.

That's got to count for something!

WolfPack said...

Yes, it may be legal because of one judge’s interpretation of what a specialty hospital is. I’m not sure that the judge’s definition matches the legislators’ intentions though. Outside of medicine other professions are prevented from wearing too many hats due to conflict of interest. Engineers, stock brokers and accountants are all limited by law in giving clients professional advice/services that if taken could personally benefit the advisor. However, when it comes to our health care, we give physicians a free pass because of their superior moral calling. I respect what physicians do but I don’t think they are immune from the ethical dilemmas the rest of us succumb to. They should not be in the position where medical advice to patients may be at odds with the physician’s personal finances. In the end what is the difference between Benefis’s MBA’s and the GF Clinics partner/doctors. Doctors can own hospitals; they just shouldn’t own the ones they refer their patients to.

Anonymous said...

Actually, Wolfpack, you should go back and read the decision. It has nothing to do with "one judge’s interpretation of what a specialty hospital is." In fact, the evidence was uncontradicted that the hospital, with the new share ownership, will not be a specialty hospital at all, but will be a general hospital. The state licensed it as a general hospital, and will inspect it to ensure it operates as one.

And, to further annihilate your argument, even if it were a specialty hospital, our legislature specifically exempted two specialty hospitals from its moratorium, this one and another one in another Montana town.

So it's legal, either way.

You're a smart guy and a good poster, but you're buying the Benefis propaganda on this one. Go read the Orders instead of the Tribune's poor interpretations of them, and then we'll talk.