Health care homework for Gov.-elect Healey

Priorities are workforce shortages, affordability, and equity

AS THE GUBERNATORIAL transition begins, Gov.-elect Maura Healey and her team will need to start setting priorities, and health care should be one of them. As the Health Policy Commission’s recent cost trends hearing revealed, some key health policy challenges are looming tied to access, cost, quality, and equity. Here are my takeaways from the discussion.

Workforce shortages: Gov. Charlie Baker and others highlighted the workforce shortages that plague just about every institutional health care provider across the continuum of services.   The Massachusetts Health and Hospital Association’s  recently released report indicates there are 19,000  unfilled positions in our state’s hospitals, 20 percent of the state’s inpatient psychiatric beds are offline because of insufficient staff, and around 1,000 patients a day are stuck in hospital beds because discharges to post-acute care providers can’t happen because of insufficient staff at their facilities. Such backups result in worse emergency department boarding problems that already are intense because of the surge of behavioral health patients coming to emergency departments during the COVID era.

As Baker noted, the staff shortage is creating access-to-care concerns and having ripple effects. Many hospitals are recruiting temporary nurses who cost more to employ and, because they are not part of the regular care team, can lead to quality of care concerns.  With hospitals claiming significant operating losses from much higher labor costs, many institutions are crying out for both state government support as well as big price increases from private insurers.  Perhaps it was no accident that on the date of the hearing, the legislative leadership  agreed to move forward with $350 million for hospitals and $195 million for our state’s nursing and rest homes.

There is no easy short-term fix for the staff shortage.  Even the Massachusetts Hospital Association’s suggested approaches to addressing the issue are really longer term in nature.  The governor’s signature is expected this week on the bill containing the $350 million, and it is going forward with the bulk of dollars still going to hospitals that are not financially distressed. (That was a concern that Nancy Kane and I raised in August. ) The new Healey Administration would be wise to prepare its arguments now for the next round of hospital subsidy requests. When they come, Healey should make sure money to address the staffing crisis is going to those institutions with liquidity or solvency challenges.  In addition, the Healey team may want to instruct staff at the Department of Public Health to deny or put on hold any capital project that could make the workforce shortage even worse.

Affordability: Driven by increased labor costs, general inflation, and continuing overhang impacts from COVID, hospitals are approaching insurers and demanding double-digit price increases.  It was sobering to hear Andrew Dreyfus, who is stepping down in December as the CEO of Blue Cross Blue Shield of Massachusetts, acknowledge the cost pressure on health care providers while warning that business and individuals who pay premiums “can’t bear the increasing costs of health care.”

Health care affordability may be the biggest challenge that the new Healey administration will face in 2023. The circumstances certainly are dire, but it may make sense to step up government oversight of the industry. The Health Policy Commission has called for the power to cap prices or price growth, and it may be time to grant that request. Rhode Island has successfully demonstrated the cost-saving value of instituting controls on the growth of hospital prices and we need such help now.

For short-term help, it may make sense for additional funds to come from the state so as to avoid insurer-awarded price increases which are then built into the annual base of insurer payments going forward. If health care provider financial challenges from staffing and inflation result in price increases being granted by insurers, these increases at least should be regulated under some sort of legislatively enacted tiered system of allowed price increases. Baker first proposed something along these lines early on in his administration but the idea was dropped when the Legislature didn’t seem to have much interest.

Healey and legislative leaders should think about combining limits on prices or price growth for providers combined with an effort to redistribute any savings toward primary care and behavioral health services.  Doing so will force those health system leaders to have to face their procedure-oriented specialists and explain that “shared responsibility” means they no longer can escape being part of the solution to the affordability crisis that plagues our entire health care system. It’s a conversation that should have taken place long ago.

Equity: The other theme at the cost trends hearing was health care equity. Boston Children’s Hospital CEO Kevin Churchwell rightly tried to reframe the challenge as being just about equity, since it involves much more than what happens within the health care ecosystem. It also involves housing access, food insecurity, educational opportunities, transportation barriers, and disability or poverty status.

The day’s presentations and discussion included various and important aspects of the equity challenge. The Health Policy Commission had its own presentation and commissioners batted around a variety of concerns —  the need for organizational health care leaders to reflect the diversity of the state’s population;  the business case that spending is higher when health care inequities are left unaddressed;  failures of providers to collect and transmit data to the state about the race and ethnicity of the people that they care for;  language barriers left unaddressed, which create access and quality problems;  and the presence of physical barriers preventing people with disabilities from being able to access office-based care from physicians and dentists.

As rich as this discussion was, it was missing something — a discussion of the new findings in a report released just that day by the Office of the Attorney General.

In pre-COVID years, the office normally talks about the findings of its most recent examination of health care cost drivers at the Hearing.  Not so this year, but the report revealed that a common risk adjustment methodology used for determining health care payment results in funding moving away from safety net providers and low income communities to insurers and providers who predominantly serve higher-income patients.

This shift happens in large part because poorer commercially insured patients often choose lower premium plans with higher deductibles. They also tend to face language, transportation, or childcare barriers when obtaining care.  If they don’t obtain care, their health issues are not captured in electronic medical records in a way that could lead to higher risk-adjusted payments to their providers. Without the trail of electronic records, insurers ultimately end up with less money to pay their providers–often safety net providers. By contrast, when wealthier patients obtain care and their recorded problems lead to higher payments made to their insurers, payments that ultimately flow through to the higher-priced providers.

It is a regressive cascade of sorts that hurts poorer insurers like Boston Medical Center Health Net Plan and providers like Lawrence General Hospital and the patients they care for, while subsidizing the Mass General Brigham health plan, Mass General Brigham providers, and their wealthier patients.

Hopefully,  Healey’s team will try to educate the federal government on the need to modify its risk adjustment methodology to better account for social determinants, a move that could put pressure on our own state’s insurers and providers to do similarly. It would be great if there would be some real progress to report on in this area by the time of next year’s cost trends hearing.

Paul A. Hattis is a senior fellow at the Lown Institute.