The Boston Globe recently ran an article discussing layoffs at Baystate Health, a large health system in Western Massachusetts. The system is planing to lay off 300 employees to try to close a $75M deficit. According to the Globe, the deficits are mainly driven by declining Medicaid reimbursement, but, more interestingly, by a $23M hit to Medicare revenue driven by a mistake made by Partners Healthcare, a health system on the other side of the state.
Here’s the fascinating backstory.
I was recently connect with two smart entrepreneurs (James Millaway and Stan Schwartz, MD) who run a company called The Zero Card. Their business is a platform where consumers and employers have access to transparent “cash” prices for a range of medical services. Providers display their best non-insurance rates and offer a fixed price for an episode of care. Individuals (or ideally self-insured employers) pay these prices directly at the time of service.
A few weeks ago, WOW Air, an Icelandic budget airline, announced that they would be flying Boston-Reykjavik at an introductory fare of $99. Despite the growth of budget airlines in both Europe and the US, WOW is apparently the first airline to try to make a margin on trans-Atlantic routes. WOW argues that smaller planes (made possible by Iceland’s mid-Atlantic location), limited service and high aircraft utilization will make the route profitable. On WOW, passengers can book a one way flight to mainland Europe for around $200, half of the roughly $400 going rate for a connecting flight on traditional air carriers.
One of the obvious consequences of this route announcement will be a further growth of consumers who cobble together a series of low-cost tickets to undercut published fares on the network airlines, (now with WOW making it to Europe and beyond). The Wall Street Journal wrote about this trend a few months ago, quoting a traveler who called this practice “virtual interlining”—basically “building connections airlines don’t want constructed”. Continue reading