"A Solution for Rising Healthcare Costs" by John B. Chessare, MD

Employers throughout the Commonwealth continue to feel the burden of rising health care costs. People often assume that the reason costs are going up has to do with provider expenses such as medical technology, supplies and salaries. But there are more factors involved in Massachusetts’ escalating health care costs than increasing labor and equipment costs.

Over the last 20 plus years, the state’s biggest provider has become increasingly able to control the rates it receives from payers. It now receives rates that are 30-40% higher than other Massachusetts providers for the same procedures and the same (or better) patient outcomes.

This payment disparity leads to serious repercussions for other Massachusetts healthcare providers, particularly those in the community. It is a factor in the razor thin margins experienced by most hospitals, impeding needed investment in new medical technology and other capital expenditures for the benefit of patients. It also impacts the hiring and retention of physicians, when the state’s largest system offers physicians a 30% premium over other providers.

Community healthcare providers are working to convince payers to make the playing field level. But other avenues are opening up as well. Major employers such as the members of the Leapfrog Group have been working for years to make the true costs of health care delivery transparent. Web sites such as this one are publishing quality data for health providers so consumers can see patient outcomes in their region. Next spring, the state’s Health Care Quality and Cost Council will begin posting average prices paid by insurers for common procedures in Massachusetts.

With greater performance data available, there will be growing recognition of the value provided by community hospitals and their capability and competence for treating the vast majority of illnesses close to patients’ homes. Community hospitals provide an important and underutilized means of controlling health care costs now and in the future.

Our health care system has recently worked with Tufts Health Plan to bring an insurance product to the market through the Connector that includes only lower cost, high quality providers. I hope that Massachusetts employers will explore this option as a means of providing exceptional health care to their people at significantly lower cost than plans that include all high cost hospitals for all services.

John B. Chessare, MD, MPH
Interim President and CEO
Caritas Christi Health Care