Tracing the origins of the Mass General Brigham fight

Paul Hattis of the Lown Institute and John McDonough of the T.H. Chan School of Public Health at Harvard University trace the origins of the fight over Mass General Brigham’s $2.3 billion expansion plan back to the 1990s.

At that time, Mass General Brigham didn’t even exist. It was known then as Partners HealthCare, which got its start in 1994 with the merger of Massachusetts General Hospital and Brigham and Women’s Hospital. The two medical giants merged as a defensive measure as the state deregulated its health care rate-setting process, but over time Partners built itself into a juggernaut — the largest, the most powerful, and the most expensive health care system in the state.  

“Partners was created in 1993 and 1994 when there was this attitude we’re deregulating, we’re getting government out of this, let’s let the market sort this out,” McDonough said on The Codcast. “So now, 30 years later, we look at the result and we’re not too happy with what we see. And that’s in health care and outside of health care. So, to some extent, Mass General Brigham is getting caught up with the renewed appreciation that there needs to be a much more aggressive watchdog on the part of the state in preventing these institutions from getting too big, at least within state borders.”

The concern about Partners has been building for some time. Seven years ago, its plan to acquire South Shore and Hallmark Hospitals was shot down by Superior Court Judge Janet Sanders, who feared the hospital system’s growing “market muscle” would allow it to exact higher prices from insurers for the services its providers rendered. Partners then looked abroad for growth, launching a venture in China that went bust.  

Now Mass General Brigham, the new name for the Partners system, is looking for growth of a different sort in Massachusetts, seeking regulatory approval for a $2.3 billion expansion that would add new beds at Massachusetts General and Faulkner Hospitals and construct outpatient centers in Woburn, Westwood, and Westborough. 

The state’s Health Policy Commission last week tried to put the brakes on the expansion, ordering Mass General Brigham to develop a performance improvement plan to reduce its costs and urging the Department of Public Health to reject the hospital system’s expansion plan.  

The Health Policy Commission was created in 2012 as a sort of hybrid approach to health care rate setting. McDonough calls it a “softer” regulatory scheme — soft because the state doesn’t set hospital rates, as Massachusetts used to do and Maryland continues to do. Instead, the Health Policy Commission sets a cost growth benchmark each year and puts pressure on health care providers to come in below it. The approach worked well for many years, but lately costs have been rising faster than the benchmark, and the Health Policy Commission says Mass General Brigham is the biggest offender. 

The big question mark is whether the Department of Public Health will reject Mass General Brigham’s expansion plan or allow it to proceed. Hattis, a former member of the Health Policy Commission and an opponent of the expansion, says he is worried about what the Department of Public Health will do. 

“They really, by their history and the staff expertise and knowledge, don’t really understand this finance, spending, market-function stuff, yet they’re the ones that have to make a decision whether these expansions go forward. I’m not even sure they understand their own regulation,” he said.

The 15-member Public Health Council within the Department of Public Health that will make the decision is made up entirely of appointees of Gov. Charlie Baker, who, interestingly, played a key role in deregulating the Massachusetts health care rate-setting market in the 1990s, working under then-Gov. William Weld. 

“They can act independently but generally speaking we don’t see them breaking out of the barn and doing things that go against the wishes of the administration,” McDonough said of the council.

Hattis said he believes the Department of Public Health will block Mass General Brigham’s proposed outpatient centers but may allow the hospital expansions to proceed in some form. McDonough said the entire expansion may be put on hold until regulators see some progress on the cost-saving plan, but he’s not sure what will happen after reading letters from Mass General Brigham officials to the Department of Public Health in the wake of the Health Policy Commission’s decision. 

“It’s very clear that they are anticipating that if this doesn’t go the way they want, it will quickly end up in court,” he said.

McDonough said the situation is being watched closely in Massachusetts but also around the country because many states have either adopted or are interested in the Bay State’s approach to health care cost containment.

“This is the moment of truth now. If the commission can’t act effectively, then the benchmark becomes kind of a joke,” McDonough said. “It looks foolish potentially if you have the policy commission trying to rein in [Mass General Brigham’s] spending and then another part of state government, the Department of Public Health, saying, ‘You want to do a $2.34 billion expansion, great, go ahead and do it.’ That contradiction has to go all the way to the top, to the governor’s office.”

BRUCE MOHL

 

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