Massachusetts could rein in hospital expansions to control cost growth

Continuing in its role of testing ground for healthcare reform, Massachusetts plans to take a hard look at "the financial implications" of how hospitals' expansion plans might impact health costs, Dr. JudyAnn Bigby, the state's secretary of Health and Human Services, tells the Boston Globe. The goal isn't an immediate reduction in the cost of care but a potential slow-down in the rate of increase, says Bigby. In a letter sent to Massachusetts Hospital Association President Lynn Nicholas and other industry leaders, Bigby and state Housing and Economic Development Secretary Gregory Bialecki stated that more extensive reviews would ensure that "new healthcare facilities or technologies are both necessary for the effective provision of care and justified given the economic circumstances."

The state's plan could impact how the Department of Public Health rules on the "determination of need'' applications that hospitals file to add new buildings, enlarge existing facilities or bring in new medical equipment. Children's Hospital Boston in February filed an application to build a new $125 million inpatient center to expand the emergency department, add extra beds for surgical recovery patients and grow its imaging department's capacity. Boston-based Partners HealthCare in January filed an application to build a $225 million replacement hospital for Spaulding Rehabilitation Hospital. In addition, Caritas Christi Health Care in Boston has filed applications for all six of its hospitals related to its pending sale to the New York private equity firm Cerberus Capital Management.

Whether hospital growth has contributed to rising costs in Massachusetts or elsewhere remains to be seen, but the current spurt of hospital expansions nationwide has definitely had an impact on competition. A dramatic case in point: Oconomowoc (Wis.) Memorial Hospital has experienced a 55 percent drop in patient admissions since a new hospital less than five miles away opened March 1, reports The Business Journal of Milwaukee.

To learn more:
- read this Boston Globe article
- read this article from The Business Journal of Milwaukee

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