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Which of the three West Shore hospitals will be better? It might be hard for patients to figure out

Posted Jun 29, 2018   Geisinger Holy Spirit Hospital, Holy Spirit Hospital, Geisinger, Holy Spirit Hospital Camp Hill Pa, Dr. Ryu, Jaewon Ryu, Harvard, Walmart, 

An overhead view of part of a 44-acre site in Hampden Township, Cumberland County, where Penn State Health plans to build a full-service hospital. The site is to the west of Interstate 81 and to the north of Wertzville Road. In the upper left is UPMC Pinnacle's West Shore Hospital. Penn State Health plans to begin construction in early 2019. (Penn State Health)

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By David Wenner | dwenner@pennlive.com

Hospital executives talk constantly about lowering health care costs and improving quality. Yet they build ever-more and ever-more expensive facilities. And someone else has to pay for it, typically area residents and businesses by way of higher health insurance premiums. Everyone's health care bill keeps going up as a result.

An example is playing out in Hampden Township in Cumberland County, where Penn State Health announced this week it will build a new hospital. The hospital will be across the street from UPMC Pinnacle West Shore Hospital, which opened four years ago. And those two sites sit practically in the backyard of Geisinger Holy Spirit Hospital.

The Penn State Health hospital is part of a partnership with health insurer Highmark, in which the two have pledged to spend $1 billion on new and upgraded facilities. In announcing the partnership last year, Highmark executives talked about lowering cost. When pressed, however, it seemed they were referring more to lowering the rate of increase, and giving more "value," than to lowering the actual price.

Health care executives commonly say this can be accomplished by making sure people get the right care at the right time in the right setting, for reasons including keeping them as healthy as possible and thereby lowering their overall health care expense.

Hence, all the new health care facilities, including doctor offices and outpatient clincics, popping up around the region, typically under the banners of Penn State Health, Geisinger Holy Spirit or UPMC Pinnacle.

The executives further contend that competition will lead to lower cost and higher quality.

So should residents living within easy reach of the three hospitals expect those things?

Stephen Foreman, an associate professor of healthcare and economics at Robert Morris University, doubts it. "I could be persuaded that the competition will improve the quality of the services offered. I don't buy the argument that it will lower costs," he said.

Rather, Foreman agrees with the argument that when health systems build competing, side-by-side facilities, costs only go up.

David Sarcone, a health care expert and associate professor at Dickinson College, has a similar view.

He points out that research over the past decade focusing on whether health care competition lowers costs has produced "at best ambiguous" results rather than clear-cut savings. The research found that costs sometimes go up.

Others, meanwhile, have long made a case that free market forces which work in consumers' favor for many kinds of goods don't work in healthcare. Free markets, they explain, work well only when consumers can clearly see the price and quality of goods, and have multiple sellers to choose from.

But as Nobel Prize winning economist Kenneth Arrow famously argued, health care is different. That's because with health care, the consumer typically depends on the seller to tell them what they need and how much. In other words, health care consumers often lack the ability to know what they need, and rely on the seller to tell them. Thus it's a lob-sided transaction in favor of the seller. Given the complexity of medical care, it's a hard obstacle to get around. And the fact that the need for health care is often unexpected, urgent and incapacitating further restricts consumers' ability to make the decisions needed for a well-functioning market.

For a long time, there have been efforts to allow patients to better-see the price of health care services, and to judge the quality. But it's a work in progress, hindered by things including health care industry resistance to revealing pricing information, and a disinclination on the parts of consumers to use quality information when available.

"It is clear we are not there yet," Sarcone said. "Despite choices in the market, we are not at a point where consumers can compare providers in an unbiased manner and make a choice necessarily in their best interest."

Still, it would be unfair to suggest the local hospital executives are merely proposing to spend money to save money. Each of the three systems is closely associated with a health insurer.

Executives of Highmark have suggested their partnership with Penn State Health creates opportunities for health care payer and the health care provider to work together to lower costs, with the savings passed along as Highmark competes to sell health insurance to local businesses and individuals. Highmark could, for example, offer health insurance plans where, if a business or individual accepts a narrow network comprised solely of certain Penn State Health providers, their premiums would be lower.

UPMC Pinnacle, with its UPMC Health Plan, could do the same.

On other levels, there are complicated factors that put Penn State Health and Highmark next door to UPMC Pinnacle. In the Pittsburgh area, UPMC no longer accepts Highmark coverage, meaning people who want access to UPMC hospitals and doctors need non-Highmark health insurance.

In the Harrisburg area, UPMC and Highmark have a contract that lasts well into the next decade. Still, it seems natural Highmark would worry UPMC might stop accepting its coverage as it did in Pittsburgh. With a strong relationship with a Penn State Health hospital in Cumberland County, Highmark would be assured of always being able to provide members access to a hospital there.

Beyond that, Cumberland County is growing fast, and it's population tends to be older and well-insured. Those kinds of demographics will attract the most health care facilities an area can support.

In fairness to the hospital executives, they say they're not ignoring the outlying ares, and promise to put facilities such as urgent care centers in those areas.

Still, Foreman, the Robert Morris economist, said recent developments in Cumberland County and elsewhere might point to a need for policy makers to evaluate whether we're seeing a kind of competition that's detrimental to the public's best interest.