Report: High Priced Providers Get 80 Percent Of All Payments To Hospitals

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.

Aron Boros, director of the Center for Health Information and Analysis. (Courtesy)

Aron Boros, director of the Center for Health Information and Analysis. (Courtesy)

“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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  • http://twitter.com/curiositykt curiositykt

    Aw.. I thought I was going to a cheaper option by choosing Atrius, they certainly don’t look like an expensive option when you go.. It’s so much more convenient going to one of the group medical teams, are any of the cheaper ones as organized as Partners and Atrius?

    • Atrius Health

      Thanks for trusting us with your care. We are glad that you find us convenient and are working hard to continue to make it easier for you to be healthy. The  prices reported to CHIA do not reflect the total cost of caring for our patients, often called “Total Medical Expenses (TME)”. We believe TME is a much more accurate reflection of everything Atrius Health is doing to keep people healthier by focusing on preventive care, care management, electronic medical records, patient portal, evening and weekend care, and care coordination, rather than payments for individual services which is what this report states.  By the total cost of care  measure we are well within the average cost per patient in this state as noted in other DHCFP reports .  We have also worked aggressively with the insurers to hold prices very steady since 2009 while others have climbed. 
      Gene Lindsey, MD, CEO Atrius Health

  • inquisitive48

    What happens when Partners buys all the smaller hospitals like Melrose-Wakefield.

  • Boston mom

    “You and I are supposed to act more like shoppers seeking the best care at the best price.”

    I truly do not understand how any intelligent person expects this logic to be an effective model for change.

    First of all “best care” is completely relative, no? For example I may deem a homebirth with a midwife at $3000 the best care at the best price. Compare that price to the bill for a natural, hospital birth ($15,000) it’s certainly the cheaper option for my insurer. But ACOG is fiercely fighting this model of care because they fear the impact on their bottom line. And thus insurance companies won’t cover a homebirth in MA so for me, the cheapest option becomes a hospital birth that’s covered by insurance.

    We see this sort of scenario play out in other areas of medicine where “the specialist” and RX reigns. Unless insurers start to cover medical options outside of the ones controlled by huge lobbying groups, I don’t see anything changing. Private citizens are naturally inclined to go with the lowest out of pocket expense regardless of whether it’s cheaper for insurers.

    And why are any of these players likely to deliberately change something that would have a negative impact on their bottom line? It’s craziness to assume drug cos, healthcare providers and insurers are going to deliberately lose money out of the kindness of their heart. They’re in the profit business just like every other facet of capitalism.

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