Massachusetts Wins the Prize for Most Expensive Healthcare

17 Jan

It has recently been brought to the attention of the good citizens of Massachusetts that we spend more than anybody else on healthcare.  According to the Massachusetts Health Policy Commission report published recently, Massachusetts spends 16.6% of it’s economy on healthcare, as opposed to the national average of 15%.  The expense is in both higher utilization and higher prices.  It is across all payer types.  The most cost is associated with hospital care and long-term care/home health care.  The report goes on for many pages with reference to lots of charts and graphs.  I cannot pretend to understand all of it, and I defer to Dr. Paul Levy, who knows a lot more about this sort of thing than I do, in a post he recently wrote for The Health Care Blog (  The best I might be able to do is to de-code some of the language in the Executive Summary.  To wit:

1. “Significant trends are occurring in the provider and payer market. For providers, the delivery system is growing increasingly concentrated in several large systems, with a larger proportion of discharges occurring from major teaching hospitals and hospitals in their system.”

Partners and Caregroup, along with a couple of for-profits, have eaten up pretty much all the formerly-independent hospital systems and physician practices.  While this means they can negotiate more effectively with vendors, it does not mean that potential cost savings gets passed on to anybody below the CEOs.

2. “…many provider organizations seek to re-orient care delivery around patient-centered, accountable care models, though significant challenges such as misaligned payment incentives, persistent barriers to behavioral health integration, and limited data and resources remain.”

This is nice-speak for “A lot of groups are moving toward accountable care organizations, without any real evidence that care in this model is better or that it’s any cheaper.”

3. “In addition, public and commercial payers are increasingly developing alternative payment methods that aim to alter supply-side incentives. However, there are significant challenges in implementation, including wide variation in these types of contracts covering Massachusetts providers, both within and across payers, as budget levels, risk adjustments, and other terms are negotiated.”

Everybody has a different deal.  Everything can be negotiated.

4. “The operating expenses that hospitals incur for inpatient care differ by thousands of dollars per discharge, even after adjusting for regional wages and the complexity of care provided. Some hospitals deliver high-quality care with lower operating expenses, while many higher-expense hospitals achieve lower quality performance.  Operating expenses are driven in part by market dynamics. Hospitals that are able to negotiate high commercial rates have high operating expenses and cover losses they may experience on public payer business with income from their higher commercial revenue, while hospitals with more limited revenue must maintain lower expenses.”

Operating expenses make no sense.  There is no consistency.  Going to a big fancy hospital with a big fancy name does not mean the care you get will be better, but it will likely be more expensive because the fancy hospital also has things that make a lot of money, like imaging machines and advanced non-invasive procedures.

5. “An estimated 21 to 39 percent ($14.7 to $26.9 billion in 2012) of health care expenditures in Massachusetts could be considered wasteful.”

No translation needed.  I could give you a hundred examples of waste right now, but anecdotal evidence is not data.  Massachusetts HPC has the data.

6. “Persistently high-cost patients – those who remain high-cost over multiple years – are easier to identify for care improvement and better health outcomes. These patients represent 29 percent of high-cost patients and make up 15 to 20 percent of Medicare and commercial spending in Massachusetts. Interventions that have been shown to improve the efficiency of care for high-cost patients include: prevention of conditions that often lead to expensive health crises; process and operational improvements that reduce the cost of episodes that are common among high-cost patients; and care management resources to support patients to manage their care more effectively and better coordinate care for patients across multiple provider settings.”

We know who the highest cost patients are and if we had better ways of encouraging prevention, managing diseases so they don’t get out of hand, and helping people take care of themselves in the community, we’d spend less.  Maybe.

So there you go!  Maybe these things can be addressed, maybe they can’t.  In the meantime, save your pennies, Massachusetts residents.  You’re gonna need them.


Tags: , , , , ,

4 responses to “Massachusetts Wins the Prize for Most Expensive Healthcare

  1. george

    January 18, 2014 at 12:53 am

    This is a highly useful post. You may, however, want to make a clarification regarding your first statement. Massachusetts does indeed have the highest per-capita spending of any state in the union (although Washington, D.C. is higher), it does not, however, have the highest spending of any state as a percentage of GDP. This is likely because: although Massachusetts has a high per-capita spend on health care, the state’s economy is also much larger than other states with a lower per capita spend. Thus, it has the highest per-capita spend by state, but other states with a smaller economy such as Maine and West Virginia actually spend more on health care as a percentage of GDP.

    • Shirie Leng, MD

      January 20, 2014 at 4:20 pm

      George – Thank you for reading! Thanks also for the clarification. I was using the report’s summary page, which did not specify per-capita vs. percentage GDP. Point taken.

    • John Fembup

      March 20, 2014 at 7:32 am

      George, I accept what you say but then, what difference does it make?

      That is, what difference is there for the person who is paying the bill – either directly for a medical service rendered, or indirectly, for an insurance premium? Wouldn’t that person’s cost be the same regardless what percentage of GDP they happened to be?

      Thanks –

  2. platon20

    January 30, 2014 at 12:34 am

    I’m confused. Didnt a wide panel of health care “experts” tell us that ACOs are the best way to go, because they can control doctors’ evil ways and herd them like cattle towards quality? Of course, many of these “experts” are not physicians and even the ones that are havent treated a patient or run a clinic in decades.

    Oops, I guess not. Turns out that large ACOs like Harvard/Pilgrim healthcare are much more interested and better at jacking up reimbursements by holding a gun to insurer’s heads rather than create a cooperative healthcare utopia.

    Private insurance markets 1, healthcare ivory tower “experts” 0


Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: