DPH gets it right on Mass General Brigham

Agency recommendation legitimizes state's cost-containment model

THE LONG-RUNNING power struggle between Mass General Brigham, the state’s largest health and hospital system, and the Commonwealth of Massachusetts took a decisive turn this past week.

Department of Public Health regulators unveiled their recommendations regarding Mass General Brigham’s expansion proposal that involves five sites and facilities across Greater Boston. The hospital system filed three distinct “determination of need” requests with the regulators for their review and approval. The regulators approved—with changes—two applications calling for major rebuilds of Massachusetts General Hospital and Faulkner Hospital (owned by Brigham & Women’s Hospital).

If DPH’s Public Health Council approves the staff recommendations, the Massachusetts General Hospital  project can proceed, though without the requested 94 new beds. At Faulkner, all requested new beds and new technology were recommended for approval, but DPH staff proposed ongoing monitoring so that new Faulkner beds will not help the mothership, Brigham & Women’s, gain more higher-priced patient admissions.

Most important, DPH staff told Mass General Brigham leaders of their recommendation to disapprove expansions and new outpatient facilities in three affluent suburban communities: Westwood, Westborough, and Woburn.  Not wanting to get an official denial, Mass General Brigham officials withdrew that application entirely last week. By so doing, they could refile the expansion requests separately or in combination.

With this move, DPH now joins its sister state agencies (the attorney general’s office, the Massachusetts Health Policy Commission, and the Center for Health Information and Analysis) in committing to guard the integrity of the state’s health care cost growth benchmark, the hallmark feature of the landmark 2012 Massachusetts cost control law. DPH regulators recognized the Health Policy Commission’s judgment about cost growth concerns from the expansions if approved.

The Health Policy Commission had already placed Mass General Brigham under a “performance improvement plan” for their years of excessive revenue growth. Arguably, had DPH approved Mass General Brigham’s proposal, such a decision would have delegitimized the state’s 10-year-old cost containment model. Though no evidence suggests that Gov. Charlie Baker intervened directly in the DPH process, he has ratified cost-control concerns throughout his two terms in office, and knows that approval would have wounded the state’s affordability goals. Such a move also would have damaged the stature of the Health Policy Commission, now nearing its 10th birthday.

What’s so important about protecting the cost-growth benchmark and the Health Policy Commission?

State leaders of both parties and all branches view the benchmark and the Health Policy Commission as their principal accountability tools to restrain health system cost growth. In the first decade of this century, Massachusetts health costs grew substantially greater that the rate of economic growth and worse than most other states. Since the benchmark and the Health Policy Commission’s activation in 2013, Massachusetts’ performance has been better than most other states.

The 2012 law has become a national model with states such as Delaware moving to replicate it. States worried about health care costs consider it less politically risky and onerous than the heavy-handed regulatory approach that has worked well in Maryland. Ironically, while other states are admiring the Massachusetts model, some state policy makers now wonder whether the 2012 model is running out of steam, given its higher recent spending increases rates. Stuart Altman, the chair of the Health Policy Commission, has called publicly for additional cost control tools.

This is the context in which the Mass General Brigham expansion bid was considered.

DPH’s rejection is not the first time in recent history that Mass General Brigham (formerly Partners HealthCare) hit a wall with regulators on an expansion plan. In 2015, a state court judge denied Partners its proposed acquisitions of South Shore Hospital in Weymouth and Hallmark Hospitals north of Boston after a firestorm of opposition and in the face of a highly critical Health Policy Commission analysis. Then-Partners CEO David Torchiana said that he felt “chastened” by the rejection.

We saw no replay of that humility from current-CEO Anne Klibanksi last Friday. She noted that, despite the state’s rejection of Mass General Brigham’s ambulatory expansion, the hospital system will “honor its commitment to provide the best care to the 227,000 patients we currently serve…”

With an extravagant advertising campaign in the New York Times, the Boston Globe, TV stations, and elsewhere, Mass General Brigham made a major bid at outflanking its suburban healthcare rivals. UMass Memorial in Worcester, in particular, went public, with CEO Eric Dickson becoming the public face of opposition and charging that the proposed expansion would rob his facility of higher paying commercially insured patients. The Massachusetts Association of Health Plans took a strong public stand against Mass General Brigham’s ambitions, as did the state’s consumer advocates at Health Care for All.

Mass General Brigham’s legendary network of allies, friends, lobbyists, clients, and others could not overcome the united opposition of the Health Policy Commission, Attorney General Maura Healey, key House and Senate leaders, and now the Baker administration.

This current political unity to uphold the 2012 statute stands in sharp contrast with the late 1980s and early 1990s when that era’s hospital rate regulation system became engulfed in political chaos. In 1991, the new administration of Gov. William Weld, helped by his young and ambitious then-Undersecretary of Health & Human Services Charlie Baker, led the successful effort to deregulate the rate regulation system. Today, as much as 10 years ago when the cost control law was signed, state leaders are united. Times such as these are moments of truth and hard to ignore.

Looking ahead, the most important questions await answers from Mass General Brigham. For example, will Mass General Brigham continue to encourage its suburban clients who live in areas near the denied ambulatory care sites to continue coming to the hospital system’s high-priced downtown hospitals and specialists, rather than more affordable local providers closer to their homes. Local providers in these service areas would happily accommodate them—at more affordable prices.

Also, will Mass General Brigham accept the DPH’s rejection of the ambulatory care proposals or will it wait awhile and resubmit one of more of the outpatient applications and attempt to achieve its thwarted goals over time?

With the new DPH reports and likely ratification of  them by the state’s Public Health Council, attention turns to Mass General Brigham’s willingness to change its pricing and cost growth trajectory. The performance improvement plan that the Health Policy Commission has compelled Mass General Brigham to produce will be a key indicator on that front. Can Mass General Brigham and the Health Policy Commission make progress in limiting the hospital system’s high revenue generation from privately insured patients?

Reportedly, Mass General Brigham had hoped not to go first in proposing a performance improvement plan to the Health Policy Commission; instead, the hospital system wanted to delay its response until receiving its hoped-for approval from DPH. The DPH conditions tied to the Massachusetts General Hospital and Faulkner approvals only involve reporting, with little likely impact. The Health Policy Commission needs to be vigilant so that Mass General Brigham will bring its costs in line with the state’s benchmark. One of us wrote recently that a multiyear and global price freeze would be a good starting point. We await what Mass General Brigham will produce by its mid-May deadline. Getting the performance improvement plan right is critically important.

Mass General Brigham maintains its important and influential role in the Massachusetts—and the US—health care system. The hospital system views itself as a class alone in New England, with its real competitors being Mayo, Johns Hopkins, Cleveland Clinic, Inter-Mountain, and other elite systems, not their small-fry cousins in Massachusetts. It must irk Mass General Brigham to no end to be restrained by the Lilliputians on the ground in Greater Boston and Massachusetts.

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The Commonwealth of Massachusetts has every right to seek to restrain the rate of growth of one of the nation’s most expensive medical care systems, especially when its ambitions undermine the financial health of other essential providers, businesses, and consumers who pay its high bills. The at-times cantankerous push-and-pull among and between health care systems and state authorities is a good sign. It tells all of us that the folks in charge take their responsibilities seriously and exercise them without fear or favor.

Paul A. Hattis is a fellow at the Lown Institute and John McDonough teaches at the T.H. Chan School of Public Health at Harvard University.