Opinion

Cost Report Creates False Impressions

By LYNN NICHOLAS

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.

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 highlight the real issues.

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 scorecard on the progress of healthcare reform in Massachusetts. This is partly because there is so much happening and because a lot of it is not yet visible to the public. Meanwhile, current data to measure progress is not available. Data from 2009, extensively relied upon in the HPC report, doesn’t fully reveal the hard work being done to improve the way care is delivered and paid for.

Most important is that, even as we at the Mass. Hospital Assoc. (MHA) study the report, 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 leaders have 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. The 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 have collectively experienced a 30% reduction in five adverse healthcare events: catheter-associated urinary-tract infections, central-line-associated bloodstream 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, as hospitals comprise less than 40% 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, like the broken behavioral-health system that takes such a toll on our families and communities. Its impact on cost can be seen in the number of patients readmitted to hospitals with behavioral-health diagnoses.

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 providers, and not all cost differences among providers are wasteful.

Lynn Nicholas is president and CEO of the Mass. Hospital Assoc. This article first appeared on the MHA blog.

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