What we need to know about Mass General Brigham expansion

The big question is whether it will add public health value, or not

AS THE BATTLE heats up surrounding the capital project proposals put forward by Mass General Brigham to the Department of Public Health, most of the focus over the next few months will be on the effort to collect data and offer some analysis about the various impacts of the planned expansion.

The scope and data measures put forward for that analytic effort are very important—and especially to those people who have to review and make decisions on whether and to what degree the proposed ambulatory site expansion should be allowed to go forward. The key decisionmakers include the Public Health Council, the DPH group that grants a determination of need, and state Attorney General Maura Healey—should she decide that the facts warrant her office’s intervention.

By far the most important analysis will be handled by the Health Policy Commission, which has decided to review the proposed capital project—something that is not directly its charge but is permitted to them when they believe that important cost-growth challenges for the state are at issue with a proposed capital project.

There will also likely be an independent cost analysis (something that DPH can mandate) but I have a lot less faith in its usefulness for exploring cost growth implications.  As the history of prior independent cost analysis efforts have shown, the term is really a misnomer as these reviews are neither fully “independent” nor are they a detailed “cost analysis.”  Instead, they almost always are performed by some sort of for-profit consulting group eager to please the client paying for it — in this case Mass General Brigham.

As these review efforts get into high gear over the next few months, here is what I am hoping they can explore:

Commercial spending increase. The most obvious place to start is to project what additional state health care spending will arise from the Mass General Brigham care given at the ambulatory sites in Westborough, Woburn, and Westwood compared to what is currently paid for similar services that already are provided by others in these service areas. (The fourth site in New Hampshire is not under review by our state.)

Mass General Brigham, through the head of its Integrated Care division, argued in Commonwealth earlier this month that “care provided at these centers would be reimbursed at lower rates than care at Mass Gernerral Brigham hospitals…”  Nice to know, but that is not the operative comparison.  The price difference between ambulatory care provided by local providers in these areas versus the prices at these new or expanded Mass General Brigham sites is the right comparison—at least for any new patients who have not previously gone to other Mass General Brigham sites for their care.  The reality is that Mass General Brigham is not spending almost $250 million to make it more convenient for their current patients or to obtain that care at a lower price; it is to expand the total number of patients and generate new business.

The key is estimating what additional referral business for both inpatient and outpatient services will likely flow from capturing new patients at these centers. This new stream of referral income may be the largest part of the additional spending burden flowing from this expansion proposal.  One can only imagine that the nearly 170 or so additional net new beds that Mass General Brigham seeks to add in its other proposed expansion projects at Massachusetts General and Faulkner hospitals are to some degree being added to help meet additional referral needs flowing from these ambulatory care sites.

Negative financial impacts on local providers. In this case, Mass General Brigham may not at present have a great proportion of market share for a range of ambulatory services in Westborough, Woburn, and Westwood. If the hospital system can gain new patients from the expansion, at first blush it would appear these markets have become more competitive. That is how traditional antitrust thinking tends to go.

But the reality is that some of the local providers need their existing share of the commercial market to offset losses incurred by taking care of patients covered by the lower-paying Medicaid and Medicare programs. So take some of that market share away, and all of a sudden they are in a negative operating loss spiral that will make things very difficult for them. The Health Policy Commission can’t study and project impacts for every provider who may lose market share to Mass General Brigham, but they should look at a few examples.

One obvious choice is UMass Memorial Healthcare. As I learned from a recent podcast interview with Eric Dickson, the CEO of UMass Memorial, the loss of any commercial business could be devastating. UMass Memorial had a negative 2 percent operating margin last year and nearly 70 percent of its patients are on either Medicaid or Medicare. For every drop of one percentage point in commercial market share, he estimates the hospital system loses $30 million in revenue.

Implications for people living in these ambulatory site service areas. An independent cost analysis may be able to tally savings in terms of time and travel costs for current Mass General Brigham patients who would be able to obtain ambulatory care services closer to home rather than traveling into Boston. And if those patients are currently obtaining ambulatory care services at a Mass General Brigham flagship hospital, perhaps care at the new ambulatory sites will save their insurers or employers some money, as long as the care is provided without facility fees and/or at a lower cost.

Other issues to explore are job and service impacts. Mass General Brigham says its centers will create new jobs, but will those be offset by job losses at other competing facilities? And will financial pressure on competitors in the immediate area result in some needing to make service cuts—possibly threatening their ability to provide needed, but money losing services often utilized by more vulnerable patient populations.

Impacts on equity. Mass General Brigham’s determination of need application indicates that about 12 percent of the health system’s patients are on Medicaid and about 77 percent are white. By opening new facilities in higher income, relatively white communities, those percentages are unlikely to move towards greater diversity.  This is just the sort of concern that Healey raised to the Health Policy Commission last October. As I noted at the time, she seemed to be worried about inequities brought about by a mismatch between health care needs and the expenditure of resources.  And so adding another transaction that will likely only worsen this expenditure/needs mismatch is something that should be explored during the current review.

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In summary, this sort of detailed analysis of the impact of a proposed ambulatory care expansion project is new for our state. Doing it in a comprehensive way will not be easy. But there is a lot at stake here—and my hope is that both the Health Policy Commission and the independent cost analysis can offer us some data and related analysis that can help determine whether Mass General Brigham’s planned ambulatory expansion project should win approval—or not.

Dr. Paul A. Hattis is a former commissioner of the Massachusetts Health Policy Commission.