States Watching as Massachusetts Takes Aim at Hospital Building Boom and Costs

A Massachusetts well being price watchdog company and a broad coalition together with customers, well being programs, and insurers helped block the state’s largest — and costliest — hospital system in April from increasing into the Boston suburbs.

Advocates for extra reasonably priced care hope the choice by regulators to carry Mass Basic Brigham accountable for its excessive prices will usher in a brand new period of aggressive motion to rein in hospital expansions that drive up spending. Their subsequent goal is a proposed $435 million expansion by Boston Youngsters’s Hospital.

Different states, together with California and Oregon, are paying shut consideration, eyeing methods to emulate Massachusetts’ decade-old system of monitoring well being care prices, setting a benchmark spending fee, and holding hospitals and different suppliers accountable for exceeding their goal. California is contemplating establishing an Workplace of Well being Care Affordability that will measure and monitor the expansion in the price of care and would implement development targets.

The Massachusetts Well being Coverage Fee examines hospital-specific knowledge and recommends to the state Division of Public Well being whether or not to approve mergers and expansions. The fee can also require suppliers and insurers to develop a plan to scale back prices, because it’s doing with MGB.

“The system is working in Massachusetts,” stated Maureen Hensley-Quinn, a senior program director on the Nationwide Academy for State Well being Coverage, who harassed the significance of the state’s strong data-gathering and evaluation program. “The deal with offering transparency round well being prices has been actually useful. That’s what all states wish to do. I don’t know if different states will undertake the Massachusetts mannequin. However we’re listening to elevated curiosity.”

With its many instructing hospitals, Massachusetts traditionally has been among the many states with the very best per capita well being care prices, although its spending has moderated in recent times as state officers have taken goal on the situation.

On April 1, MGB, an 11-hospital system that features the famed Massachusetts Basic Hospital, unexpectedly withdrew its proposal for a $223.7 million outpatient care growth within the suburbs after being informed by state officers it wouldn’t be authorised.

That growth would have elevated annual spending for commercially insured residents by as a lot as $28 million, driving up insurance coverage premiums and shifting sufferers away from lower-priced opponents, based on the fee.

This marked the primary time in a long time that the state well being division used its authority to dam a hospital growth as a result of it undercut the state’s objectives to manage well being prices.

Different elements of MGB’s $2.3 billion growth plan additionally met resistance.

The well being division employees really useful approving MGB’s proposal to construct a 482-bed tower at its flagship Massachusetts Basic Hospital and a 78-bed addition at Brigham and Ladies’s Faulkner Hospital. However they urged rejecting a request for 94 extra beds at MGH.

The division’s Public Well being Council, whose members are principally appointed by the governor, is scheduled to vote on these suggestions Might 4.

The well being coverage fee, which works independently of the general public well being division however supplies recommendation, has additionally required MGB to submit an 18-month cost-control plan by May 16, as a result of its costs and spending development have far exceeded these of different hospital programs. That was a significant motive the expansion in state well being spending hit 4.3% in 2019, exceeding the fee’s goal of three.1%.

That is the primary time a state company in Massachusetts or anyplace else within the nation has ordered a hospital to develop a plan to manage its prices, Hensley-Quinn stated.

MGB’s $2.3 billion growth plan and its refusal to acknowledge its excessive costs and their influence on the state’s well being prices have united a usually fractious set of stakeholders, together with competing hospitals, insurers, employers, labor unions, and regulators. In addition they had been angered by MGB’s lavish promoting marketing campaign touting the patron advantages of the growth.

Their battle was bolstered by a report final yr from state Lawyer Basic Maura Healey that discovered that the suburban outpatient growth would enhance MGB annual income by $385 million. The nonprofit MGB reported $442 million in operating income in 2021.

The Massachusetts Affiliation of Well being Plans opposed the MGB outpatient growth.

The well-funded coalition warned that the growth would severely harm native hospitals and different suppliers, together with inflicting job losses. The buyer group Health Care for All predicted the shift of sufferers to the dearer MGB websites would result in increased insurance coverage premiums for people and companies.

“Having all that opposition made it fairly simple for [the Department of Public Health] to do the suitable factor for customers and price containment,” stated Lora Pellegrini, CEO of the well being plan affiliation.

Republican Gov. Charlie Baker, who has made well being care price discount a precedence and who leaves workplace subsequent January after eight years, didn’t wish to see the erosion of the state’s pioneering system of worldwide spending targets, she stated.

“What wouldn’t it say for the governor’s legacy if he allowed this large growth?” she added. “That will render our complete cost-containment construction meaningless.”

MGB declined to remark.

Massachusetts’ aggressive motion inspecting and blocking a hospital growth comes after many states have moved in the other way. Within the Nineteen Eighties, most states required hospitals to get state permission for main tasks beneath “certificates of want” legal guidelines. However many states have loosened or deserted these legal guidelines, which critics say stymied competitors and failed to manage prices.

The Trump administration really useful that states repeal those laws and go away hospital growth tasks as much as the free market.

However there are indicators the tide is popping again to extra regulation of hospital constructing.

A number of states have created or are contemplating creating commissions much like the one in Massachusetts with the authority and instruments to investigate the market influence of expansions and mergers. Oregon, for instance, just lately handed a legislation empowering a state company to assessment well being care mergers and acquisitions to make sure they preserve entry to reasonably priced care.

Regardless of the defeat of MGB’s outpatient growth, Massachusetts Home Speaker Ron Mariano, a Democrat, stated the state’s cost-control mannequin wants strengthening to stop hospitals from making an finish run round it. A invoice he backed that handed the Home would give the fee and the legal professional basic’s workplace an even bigger function in evaluating the fee influence of expansions. The Senate hasn’t taken up the invoice.

“Hospital growth is the most important driver in the entire medical expense kettle,” he stated.

In the meantime, cost-control advocates are desirous to see how MGB proposes to manage its spending, and the way the Well being Coverage Fee responds.

“Except MGB by some means agrees to restrict will increase in its supranormal pricing, like a five-year worth freeze throughout the system, I don’t know that the [plan] will accomplish something,” stated Dr. Paul Hattis, a former fee member.

Hattis and others are additionally ready to see how the state guidelines on a bid by Boston Youngsters’s Hospital, one other high-priced supplier, to construct new outpatient services within the suburbs.

“For these of us on the affordability facet, it’s just like the sheriffs rediscovered their badge and realized they actually may say no,” he stated. “That’s a message to different states that in addition they ought to constrain their bigger supplier programs, and to the programs that they will not do no matter they please.”

This story was produced by KHN (Kaiser Well being Information), a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is without doubt one of the three main working applications at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering info on well being points to the nation.

KHN (Kaiser Well being Information) is a nationwide newsroom that produces in-depth journalism about well being points. Along with Coverage Evaluation and Polling, KHN is without doubt one of the three main working applications at KFF (Kaiser Household Basis). KFF is an endowed nonprofit group offering info on well being points to the nation.


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