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Posted by (name unknown) on Jan 9th, 2014 3:32pm

The state's Health Policy Commission (HPC) just released its latest Cost Trends Report, in which it claims Massachusetts healthcare providers – primarily hospitals – waste somewhere on the order of $14.7 billion to $26.9 billion by providing "unnecessary" medical care. While we are still delving into details of the report, I wanted to share some initial reactions. Some of the report's concerns regarding "unnecessary" medical care are valid, but the report glosses over some of the non-hospital systemic problems that help drive "unnecessary" care and many of the very real improvements that hospitals in Massachusetts have already achieved. Some of the report's claims also foster misunderstanding about cost variations among different kinds of hospitals, which makes for provocative sound bites but ultimately fails to shed light on the true issues in the cost debate.

Despite critics' claims to the contrary, there are some valid and necessary reasons for higher costs at academic medical centers, though it's also true that some of the cost disparities warrant much closer scrutiny and should require justification if they are to continue. That is all part of the reform that is underway in Massachusetts. Ultimately what should guide the decision-making process is a commitment that each patient should receive the right care in the right setting.

It's hard to keep a score card on the progress of healthcare reform in Massachusetts. This is partly because there is so much happening and because a lot of it's not yet visible to the public. Add to that reality the fact that current data to measure progress is not available. Data from 2009 that is extensively relied upon in the HPC report doesn’t fully reveal the hard work that is being done to improve both the way care is delivered and is paid for. But what's most important is that even as we study the report, Massachusetts hospitals are working collaboratively with each other, non-hospital providers, government, and other stakeholders to improve care while becoming even more cost efficient, including in the areas identified in the HPC report as examples of 'wasteful spending.'

For example, 10 Massachusetts hospitals have hosted an MHA educational program on Lean continuous improvement techniques since 2010. As a result, more than 240 healthcare leadershave joined other Lean experts in deploying these techniques in hospitals.

The Massachusetts hospital community has also been making quality and patient safety improvements on many fronts. MHA's Board of Trustees and all our member hospitals' boards unanimously endorsed an association-wide initiative to make measurable, concrete improvements in hospitals' performance, focusing on reducing readmissions and hospital acquired infections. In addition, most Massachusetts hospitals are enrolled in a national quality improvement collaborative aimed at improvements in 10 patient safety areas. And the 29 Massachusetts hospitals that are enrolled in the MHA-coordinated Hospital Engagement Network (HEN) have collectively experienced a 30% reduction in four adverse healthcare events: catheter-associated urinary tract infections, central line-associated blood stream infections, pressure ulcers, ventilator-associated events, and early elective deliveries.

It is true that hospitals can become more efficient and improve the delivery of care – but that's only one piece of the overall healthcare costs scenario – hospitals comprise less than 40 percent of overall healthcare expenditures. There is ample evidence that underinvestment in behavioral health issues adds to the cost of the overall healthcare system, with preventable readmissions being just one example.

The HPC report is correct in its conclusion that prime areas of opportunity for improvement moving forward include:

  • fostering a value-based market
  • promoting an efficient high-quality healthcare delivery system,
  • advancing alternative payment methods, and
  • enhancing transparency and data availability.

But there are market practices that impede progress. An example is the PPO market's growth at the expense of the HMO market, which makes transition to global payment and other alternative payment systems more difficult. In particular, more attention needs to be paid to advancing alternative payment methods, because in Massachusetts the health plan offerings are increasingly in contrast with this strategy, because employers are now promoting direct contribution, high deductible plans. Payment reform is the single biggest opportunity here because it makes the improvement of care quality, patient safety and efficiency an absolute priority.

But the PPO development is only one example of impediments to more rapid reform. There are others, like the broken behavioral health system that takes such a toll on our families and communities. Its impact on cost can be seen readily in the number of patients who are readmitted to hospitals with behavioral health diagnoses. These problems are mentioned not as excuses but rather as challenges that can and must be addressed in order to achieve truly comprehensive improvements in healthcare.

It's important to realize that hospitals are already pursuing many of the strategies cited in the HPC report as opportunities to reduce costs and improve efficiency, although more certainly can and will be done. But cost isn't solely a problem of care providers, and not all cost differences among providers are 'wasteful.'

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