June 8, 2001

In its seven years, the Partners system has evolved into a succesful hospital network, but still faces the challenges of a financially strained health care environment. Samuel O. Thier, MD, president and CEO of Partners HealthCare, delivered this and other messages in a progress report at a Partners Town Meeting at the MGH June 6.

Thier explained that while many hospitals are experiencing great financial pressures from external sources, such as low Medicaid and Medicare payments, Partners remains committed to providing quality care to all patients, regardless of their ability to pay. In fact, the total cost for Partners to provide services to Medicaid patients last year was $175 million, of which only $120 million was reimbursed, creating a loss of $55 million. Partners-affiliated physicians lost an additional $10 million in providing services to Medicaid patients. In response to these challenges, Thier noted that Partners is involved in efforts to raise state Medicaid rates to cover reasonable costs of care. In addition, Partners hospitals are supporting Medicaid innovations such as coordinating care for the sickest patients, enhancing pharmacy practices and improving data on costs and quality.

Partners also has been working with a consortium of hospitals around the country to continue to push for further relief from the 1997 Balanced Budget Act (BBA). In spite of some relief from the BBA, Partners still faces $377 million in future Medicare cuts.

Thier added that health care premiums continue to cause financial strain by not keeping pace with inflation. For example, premiums went up only 15 percent in five years, while medical inflation (expenses such as drugs and supplies) increased nearly 40 percent in the same timeframe. Thier noted that Partners successfully negotiated contracts with HMO Blue and Tufts, and currently is negotiating with Harvard Pilgrim. Partners also will continue to lobby for fair HMO premiums that reflect the true costs of care and will help ensure that a more adequate share of higher HMO payments goes to caregivers.

Despite these financial challenges, Partners has experienced success in many key areas while reducing costs significantly. Admissions growth has occurred throughout the Partners system, as has an increase in health center patients (see charts). Partners hospitals also have seen considerable increases in research funding – the MGH and BWH again were the number one and two top independent hospital recipients of NIH funding. Partners' total research activity in 2000 grew to $522 million.

Thier noted that specific centers of excellence throughout the Partners system are doing groundbreaking work in such areas as AIDS research and treatment, minimally invasive therapies, genomics, cancer treatment, medical errors prevention, xenotransplantation and imaging technology.

"We have continued to grow systemwide, while continuing to bring the costs of health care down," said Thier. "Yet we still must continue to have sufficient resources to carry out our patient care, teaching and research missions through some key system goals."

These goals include: integration of patient care between Partners academic medical centers and community settings, Partnerswide quality measurement and improvement initiatives, professional staff recruitment and retention and developing a plan to align incentives for institutions, physicians and administrators.

Click here for questions and answers from the town meeting.