Report: Pricey Providers Take In 80% Of All Money Spent On Hospitals

Martha Bebinger reports:

BOSTON — As Massachusetts tries to become the first state to keep health care spending in line with the gross state product, a new report offers some startling insights about what it might take to do that.

A report by the Center for Health Information and Analysis (CHIA) finds that higher priced hospitals and doctors take in 80 percent of all the money health insurers spend on hospitals and doctors. These hospitals and physicians are paid more, they see more patients, and they have more patients with complicated ailments.


“That means that in order to save a lot of money, you really have to go after those high priced hospitals, because trying to squeeze dollars out of the low priced hospitals, there’s just not a lot of payments there,” said Aron Boros, director of the CHIA.

The state is taking what Boros calls “a light touch” when it comes to taking on high-cost hospitals. The state is largely counting on you, me, our employers and our health insurers to tackle this problem. You and I are supposed to act more like shoppers seeking the best care at the best price. And, Boros says, consumers have to start demanding that employers and insurers pressure high cost hospitals and doctors to lower their prices.

“If their employers and their insurers are focused on this question, that’s where the real power is to reduce costs overall,” Boros said, “particularly for those high priced hospitals.”

So which hospitals and doctors have the most patients and the highest prices?

For physicians, most of the money goes to doctors affiliated with Partners HealthCare, Atrius, Children’s Hospital, and the list continues.

For hospitals, Brigham and Women’s tops the list, then Mass General, UMass Memorial Medical Center, Children’s Hospital, and so on.

I called Partners, the network that includes Brigham and Women’s and Mass General. Rich Copp, the vice president for communications, says Partners has taken several steps to lower costs since the numbers for this report were collected in 2009 and 2010.

“For example,” Copp said, “Partners has voluntarily ripped up contracts with Blue Cross, Harvard Pilgrim and Tufts, providing consumers with $345 million in savings. We’re also participating in new payment models with each of those three insurers. And we were selected as just a handful of organizations by the federal government as a Pioneer Accountable Care [Organization], which will deliver high quality care that is affordable.”

But if all hospitals are accepting lower rates of increase, how will the gap between high and lower priced hospitals change over time? Copp says the move to global payments will produce savings for Partners.

“Those types of efforts hold hope that costs can be contained in the long term,” Copp said.

But we don’t know yet if these steps that high priced hospitals are taking to lower costs will make a difference. CHIA plans to update this report every year. This first report is intended as a baseline for commissioners just appointed to oversee cost control efforts in Massachusetts.

Stuart Altman, who chairs the Health Policy Commission, an oversight group, says he wants more details about specialists and the type of care hospitals provide.

“I think the commission, working with the center [CHIA] needs to go the next few steps, and they’re important steps, before we’re in a position to make any kind of recommendation about what we should or shouldn’t do with respect to the data,” Altman said.

Some health care experts say it will be difficult to curb health care costs if consumers keep choosing brand name hospitals over the community alternatives for routine care. But consumers have little access right now to cost and quality information that would help them make smart choices.

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