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"World's Costliest Health Care?" by David F. Torchiana, MD

About every six months, our local media carry some version of this story about Massachusetts healthcare costs, and explain that the problem is we have too many doctors, and that no one is doing enough to control costs. Just this last month, the Commonhealth blog reiterated this claim via a guest contributor as did reports on healthcare from the New England Healthcare Institute and the Boston Foundation.

The label is both facile and inaccurate. Two of the “costs” that are included in the numbers that appear so inflated are the costs of doing research and the costs of caring for out-of-state patients, both activities that bring with them substantial revenue. By any rational criteria these are not a burden but among the benefits of having some of the best hospitals in the country. To label ours as the world’s costliest health care you must calculate that the extraordinary level of funding that Massachusetts receives from the National Institutes of Health is a health care cost and that together with the care we provide to out-of-state and international patients – who often pay the highest rates for that care – these funds are a drain on the Commonwealth’s economy. They plainly aren’t. Life sciences research and out-of-state and international patient care are key elements of the health care economic engine that sustains this Commonwealth in rough economic times and employs 14 percent of our workforce.

Insurance premiums are a better measure of healthcare costs than hospital expenditures.

In 2005, single coverage in MA was 6.1 percent above the national average. Family coverage (which covers most of the market) was 6.6 percent higher than the national average. Not only are these differentials far less than the 40% which is commonly cited but they are also not growing at a rate that is higher than elsewhere — Massachusetts ranked 31st out of the 40 states measured on average annual growth in premiums from 1997 to 2004. The fact is that while the cost of living is higher in Massachusetts than elsewhere, the difference is actually less in healthcare than in other sectors:

boston2006costofliving.jpg

I am not trying to say that the cost of health care isn’t a problem, in Massachusetts or anywhere else. It is a big problem and we need to do more to manage it. Focusing on the care of the chronically ill will always be the most important step because the sickest 10 percent of Americans account for over 70 percent of health care costs. Learning how best to coordinate care for a population over time in the most cost effective way has been nearly impossible to do in our fragmented payer/provider structure. Instead the focus has all been on individual episodes of care, office visits, tests, hospitalizations, procedures and interventions – where most innovations end up adding cost.

This has to change and a primary instrument of that change is going to be healthcare information technology (IT) which is steadily taking hold in Massachusetts through the efforts of many organizations: government, payers, health centers, hospitals and physician practices. More effective management of information and broad application of decision support enabled by IT will make healthcare safer, better and less costly. There are plenty of other ideas out there to control costs, some will help, some won’t. What clearly doesn’t help is to cast this as a unique local problem and to imagine that we therefore have only ourselves to blame.

David F. Torchiana, MD
Chairman and CEO
Massachusetts General Physicians Organization (MGPO)

This program aired on August 21, 2007. The audio for this program is not available.

Martha Bebinger Twitter Reporter
Martha Bebinger covers health care and other general assignments for WBUR.

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