Hospital care shifting to high-cost medical centers

‘Troubling’ trends following mergers have health commission worried

HOSPITAL ACQUISITIONS BY large Massachusetts provider networks are leading to more patients receiving care in higher-cost teaching hospitals and fewer patients being cared for in community hospitals, according to data presented Monday afternoon by the state Health Policy Commission.

Hospital executives testifying at Monday’s hearing of the Health Policy Commission. From left, Peter Slavin, president of Massachusetts General Hospital; Howard Grant, president and CEO of Lahey Health; John Polanowicz, executive vice president of Steward Health Care System; and Dianne Anderson, president of Lawrence General Hospital.

The trends are moving in the opposite direction of what health policy leaders have long declared a major goal of cost-control efforts: reducing the share of patients treated at the state’s expensive academic medical centers.

“Too much of our care is delivered in expensive settings, in teaching hospitals and academic medical centers, when it could safely and appropriately be delivered in the community hospitals,” said David Seltz, executive director of the commission, at its annual hearings on cost trends in health care.

Seltz said leaders of the state’s large provider networks all made commitments at the time they sought approval for takeovers to maintain care at community hospitals. “Keeping care in the community is always cited as a goal of consolidations,” he said.

The report suggests that is not what has happened.

The commission analysis looked at 14 hospitals that were acquired by or reached a contracting affiliation with a large provider organization between 2011 and 2016. The report looked at share of patients in the area around a community hospital that got care appropriate to be delivered at the local hospital before and after the transactions. It also looked at the share of those patients that got care at other hospitals, including academic teaching hospitals, before and after the acquisitions.

For many of the 14 hospitals, the share of “community-appropriate discharges” from local hospitals declined following the acquisition, raising the question of whether the takeovers were driving more patients to high-cost teaching hospitals who could be appropriately care for at community facilities.

Overall, the share of community-appropriate discharges in the state declined over the five-year period from 59.8 percent to 57.5 percent, while the share of these cases being discharged from non-community hospitals increased from 40.2 percent to 42.5 percent. But the decline in the share of community-appropriate care was steeper at many of the 14 hospitals following their acquisition than the statewide trend.

At Cooley Dickinson Hospital in Northampton, the share of community-appropriate discharges fell from about 31 percent in 2013, the year it was acquired by Partners HealthCare, to less than 26 percent in 2016.

At Morton Hospital in Taunton, the figures went from about 47 percent in 2012, when it was acquired by Steward Health Care System, to roughly 37 percent in 2016.

At Lawrence General Hospital, community-appropriate discharges also fell, from about 47 percent in 2014, the year it affiliated with the Beth Israel Deaconess Care Organization, to less than 44 percent in 2016.

Stuart Altman, chairman of the Health Policy Commission, called the trends “a little troubling.”

Peter Slavin, president of Massachusetts General Hospital, one of the flagship hospitals in the Partners HealthCare network, took issue with the report, saying its measurement was “hopelessly confounded by other things going on in this period of time.” He said a big shift in recent years in care from inpatient to outpatient settings could explain some of the trend, as community hospitals would tend to have more patients suitable for that shift in care setting.

Slavin was one of four hospital leaders on a panel that took questions from commission members following presentation of the data.

Donald Berwick, a member of the commission, said he didn’t “quite get the logic” of Slavin’s claim. Berwick said the shift Slavin cited shouldn’t affect an analysis that is looking at where community-appropriate patients are getting inpatient care.

If the state is going to push forward with the aim of having as much care provided in community hospitals as is appropriate, there has to be agreement on how to assess progress, said Berwick.  “If we are to proceed with that as a goal, we have to agree on the metric,” said Berwick. “I think we should try to nail this down. The last thing we should end up with is discord” over how we measure this.

Not all of the trends could necessarily be explained by a shift of patients from a provider network’s community hospitals to its own costlier teaching hospitals.

The decrease in community-appropriate care at Cooley Dickinson Hospital, for example, was not the result of patients in the Northampton area going to Partners HealthCare hospitals in the Boston, but rather reflected migration of these patients to Baystate Medical Center in Springfield.

Not all of the acquisitions led to a decrease in the share of community-appropriate discharges from community hospitals. At community hospitals acquired by Burlington-based Lahey Health, the share of community-appropriate discharges increased slightly.

“We’re committed to keep the care local and we’re committed to keep the costs of care down, and that’s why I think we’ve gotten the results we saw today,” said Howard Grant, Lahey’s president at CEO.

Community-appropriate discharges fell at Merrimack Valley Hospital in Haverhill following its acquisition in 2011 by Steward. But following the 2014 merger of Merrimack Valley and Holy Family Hospital in Metheun the share of community-appropriate discharges rose from about 34 percent to nearly 38 percent in 2016.

Altman said the expectation with hospital acquisitions has been that some prices may go up because of the increased market clout of larger networks, but that more care would be shifted to lower-cost community hospitals over time.

“We get uncomfortably skeptical when we look four years down the pike and we didn’t see it,” he said. “We need to lay this one on the table,” he said.

David Cutler, a Harvard economist and member of the commission, asked the hospital leaders whether policymakers should no longer believe the expectations laid out by hospitals proposing acquisitions “because most of the time it’s not true.”

“I think the data is what it is,” said John Polanowicz, executive vice president of Steward Health Care System. In considering mergers going forward, he said, regulators should “look at other value that’s going to be created.”

Seltz said the chief barriers cited by providers to keeping care at community hospitals are patient preferences and perception of quality, physician preferences, geographic proximity to more expensive hospitals, and inadequate cost-sharing incentives.

Dianne Anderson, president of Lawrence General Hospital, said her hospital has made big investments in its facilities that are paying off in increased patient volume this year. “We’re definitely seeing trends in the right direction,” she said.

But Anderson said big variations in prices paid for hospital services constrain her hospital’s ability to continue to make those kinds of upgrades. “We have to be sustainable to continue the journey,” she said.

Grant said payment incentives are not strong enough to overcome patient preferences for seeking care at costly teaching hospitals, even for conditions that can be treated effectively at community hospitals.

Meet the Author

Michael Jonas

Executive Editor, CommonWealth

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

About Michael Jonas

Michael Jonas has worked in journalism in Massachusetts since the early 1980s. Before joining the CommonWealth staff in early 2001, he was a contributing writer for the magazine for two years. His cover story in CommonWealth's Fall 1999 issue on Boston youth outreach workers was selected for a PASS (Prevention for a Safer Society) Award from the National Council on Crime and Delinquency.

Michael got his start in journalism at the Dorchester Community News, a community newspaper serving Boston's largest neighborhood, where he covered a range of urban issues. Since the late 1980s, he has been a regular contributor to the Boston Globe. For 15 years he wrote a weekly column on local politics for the Boston Sunday Globe's City Weekly section.

Michael has also worked in broadcast journalism. In 1989, he was a co-producer for "The AIDS Quarterly," a national PBS series produced by WGBH-TV in Boston, and in the early 1990s, he worked as a producer for "Our Times," a weekly magazine program on WHDH-TV (Ch. 7) in Boston.

Michael lives in Dorchester with his wife and their two daughters.

“I’m a firm believer that people should always have a choice,” said Grant. “But if they make a choice that’s not value-based and higher cost, they must bear the cost. And that’s not the way the market is structured right now.”

 

  • Paul Levy

    MOS, as Mass policymakers bury their heads in the sand. The goal of consolidation is to garner market power and “feed the beast” that is represented by the academic centers. Professor Cutler is the only one who seems to get the game that is played by petitioners before the HPC: Policymakers should no longer believe the
    expectations laid out by hospitals proposing acquisitions “because most
    of the time it’s not true.” Even if administrative measures are added to merger approvals, they are not of sufficient magnitude to change the underlying behavior. The legislature and Governor(s) had a chance to control this, but instead they passed legislation that validates this direction by the big players. These organizations are simply cost centers in search of revenue streams