Voices in Healthcare

There has been a lot of discussion about healthcare costs lately,  but 'cost' can mean different things to different stakeholders. The Massachusetts Hospital Association (MHA) has issued a report that explains and examines the true meaning of "healthcare costs" for hospitals, and spells out the difficult economic realities hospitals face and which must be taken into account in order for healthcare reform efforts to succeed.

MHA's "Hospital Costs in Context: A Transparent view of the Cost of Care" illustrates Massachusetts hospitals' commitment to being part of the solution in making healthcare more affordable, details some of the sacrifices hospitals are already making to achieve the long-term goals of healthcare reform, and the need for caution in adopting short-term fixes so as not to disrupt essential medical services and further damage the state's economic engine.

Our report highlights the fact that for hospitals, 'cost' means the resources it takes to produce and deliver high-quality medical services to the community. Massachusetts hospitals have already taken substantial steps to reduce their expenses without compromising care, and are being asked to do even more as state payment reform advances and federal health reform get underway. This part of the cost equation is less well understood than most, and it needs to be taken into consideration with all the other factors in order for healthcare reform to succeed.

The report covers issues such as labor costs (which in the case of wages paid to Registered Nurses, for example, increased by more than 50 percent from FY 2004 to 2008); patient care supplies (increased by 34.7 percent over four years); and capital costs (up more than 23 percent in the same time period). The paper also explains that consistent Medicare and Medicaid underpayments represent a significant part of the healthcare "cost" equation in Massachusetts, as a portion of government underfunding has historically been passed on to insurance companies whose rates are, at least to some extent, negotiable.

It's clear that our state leadership is focused on immediate steps to improve the affordability of health insurance and to save or create jobs. Our caution is to recognize the real world cost pressures faced by hospitals and their own cost-cutting initiatives.  Any short-term regulations aimed at addressing healthcare costs must take into consideration ongoing MassHealth underpayments to hospitals and additional Medicare cuts coming down the line from federal reform.