Efficient hospitals told to pay up!

In yet another example of political interference undermining quality healthcare, the Massachusetts state Senate has passed legislation that would penalize high performing hospitals for operating in an efficient and business-like fashion. You can read all the details by clicking here. The legislation now moves on to the state House.

If approved, hospitals in Massachusetts that have had an operating surplus in the past two years would be "taxed" by the state in order to provide $100 million to subsidize healthcare for small businesses and individuals. Some in the state Senate are calling this an “assessment,” but let’s be honest, this would be a “tax” on well-run hospitals in the Boston area.

Only hospitals with an operating profit margin of more than 2.5 percent for the past two years would be affected. To me the message being sent is clear:  if you run an efficient organization, we, the state, will penalize you. Hospitals that are unable to produce a surplus would be exempt from this "tax."

The troubling implications of this move are that comparative quality indicators were not even considered, nor were comparative efficiency measures. In my mind, this kind of senseless thinking will eliminate incentives for hospitals to perform well. It is a horrendous possibility that would only promote mediocrity.

Given that Massachusetts has been seen as a model for the nation, I would hope that we revisit this kind of thinking before it is too late. High performing hospitals should be rewarded for doing well. Wasn’t that the intention of the new law President Obama just signed?

Massachusetts is attempting to tax hospitals in order to pay for a health reform plan the state promised, but can no longer afford. My fear is that this is going to be a similar situation across the country.

Mike Daly blogs regularly at Action for Better Healthcare.