INSIDE THE ISSUE

> The Benchmark
> Government Shutdown Averted
> Post-Acute Care Hearing
> Patient Safety
> Care Gap in Nashoba Valley

MONDAY REPORT

Hospital Spending Close to State’s Economic Growth

Armed with the Center for Health Information and Analysis’ (CHIA’s) recent Annual Report on the Performance of the Massachusetts Health Care System, the Health Policy Commission (HPC) and the Joint Committee on Health Care Financing held their annual review of the state’s healthcare cost growth benchmark last Thursday.

CHIA’s report found that healthcare expenditures in Massachusetts totaled $78.1 billion dollars in 2023, representing 8.6% growth from the prior year and, as expected, surpassing the state’s 3.6% healthcare cost growth benchmark that the provider community has long deemed outdated.

Pharmacy spending represented the largest share of overall healthcare spending, increasing 11.6% from 2022 to 2023 and accounting for nearly a quarter of overall spending growth. Another major factor of overall spending was the fact that MassHealth administered $1.5 billion in new payments to hospitals to support key initiatives in quality and health equity through the historic Medicaid waiver. That funding was fueled through a hospital tax and federal match and had no impact on the state budget.

For 2022-2023, hospital inpatient and outpatient spending increased by a combined 6.3% – and was even lower with pharmaceutical costs removed. That aligns closely with the state’s economic growth of 5.8% in the same time period. The intent of the state’s 2012 cost containment law was to tie healthcare growth to overall state economic growth. However, for the past 10 years, the commonwealth has not linked the benchmark to Massachusetts economic activity. Instead, the state has measured healthcare spending to a stagnant growth rate of 3.6% that is set arbitrarily each year. Actual growth in the gross state product has typically exceeded the benchmark for the past 10 years.

“Given the staggering pressures Massachusetts healthcare providers are under, it is remarkable that 2023 hospital spending still managed to mirror the state’s overall economic growth,” said MHA President & CEO Steve Walsh. “There were serious costs associated with keeping patient care afloat for patients, most of which torpedoed hospital finances and still exist today – including fast-rising supply and pharmaceutical expenses, caring for sicker people in need of longer hospital stays, and taking sole responsibility for the state’s growing health safety net shortfalls.”

During the 2022-23 period of CHIA’s report, Massachusetts hospitals were still spending close to $1.5 billion on temporary labor costs, and were losing $400 million annually relating to patient stuck in their facilities and unable to transition to the next level of care. (Hospitals are not paid for those extra days and must absorb the costs on their own.) CHIA also found that the median hospital operating margin in FY2023 was 0.2%. The most recent data (through June 2024) shows statewide hospital median operating margins have worsened, and now stand at negative 0.9%.

CHIA’s new report shows that the cost of food, housing, childcare, and labor all grew at a faster rate than paid medical claims in 2023.

As the HPC continues to rely on CHIA’s analysis of healthcare finances from two years prior to inform its recommended benchmark for next year, MHA urged a review of the entire process.

The intent of the state’s 2012 cost containment law was to tie healthcare growth to overall state economic growth, MHA has noted. However, for the past 10 years, the commonwealth has not linked the benchmark to Massachusetts economic activity. Instead, the state has measured healthcare spending to a stagnant growth rate of 3.6% that is set arbitrarily each year.

“CHIA’s report proves how rapidly healthcare is changing in the commonwealth,” MHA’s Walsh said. “Massachusetts deserves a modernized approach to the benchmark that embraces the real-time needs of today’s patients and healthcare providers – one that can account for inflation, labor costs, and the state’s actual gross state product. These are the barometers by which every other sector is measured.”

MHA worked with legislative champions to file two bills filed this session (H.3196 and S.2047) that would reform the healthcare cost benchmark by using the most recent 10-year period to calculate the average growth rate in the state economy, which would then be used to inform the benchmark.

Government Shutdown Averted

Congressional leaders sought to find common ground last week on fiscal year 2025 funding package that had to pass by midnight on Friday, March 14 to prevent a government shutdown.

House Speaker Mike Johnson (R-La.) unveiled a narrowly focused continuing resolution (CR) on March 8 that would largely extend current funding for most programs through September 30 – the end of the fiscal year. The package would continue the expiring health extenders, which include the Medicare telehealth flexibilities and payments for Medicare dependent and low-volume hospitals. The package would also delay a scheduled Medicaid Disproportionate Share Hospital cut, which, if implemented, is based on a formula that would result in the largest cuts for states like Massachusetts that have a low percentage of uninsured residents. Overall, the CR largely funds federal health programs at current levels, but it includes unexpected language to cut by more than half current funding for the Department of Defense Congressionally mandated medical research programs.

The House passed the CR last Tuesday by a party line vote of 217-213. Senate rules require a 60-vote cloture process before a final vote on the CR. On Thursday, Senate Minority Leader Chuck Schumer (D-N.Y.) announced his intention not to oppose the GOP funding bill. On Friday, the Senate voted 62-38 to invoke cloture, which allowed the bill to move forward for a final vote of 54-46 later on Friday, thereby averting a shutdown. The president signed the bill on Saturday. The entire Massachusetts delegation voted against the continuing resolution.

House Ways and Means Committee Holds Hearing on Post-Acute Care

On March 11, the U.S. House Ways and Means Committee’s Subcommittee on Health held a hearing entitled “After the Hospital: Ensuring Access to Quality Post-Acute Care.” The hearing covered a range of topics affecting the post-acute care sector, including reimbursement rates, workforce issues, quality reporting regulations, prior authorizations in the Medicare Advantage program, and proposed reductions to Medicaid spending.

While both Republicans and Democrats on the subcommittee agreed that post-acute care was critical to the health of Americans, the two parties largely differed on their approach. Republicans focused on ways to reduce regulatory burden and ensure appropriate reimbursement for post-acute care facilities and agencies, while Democrats primarily focused on how reductions in Medicaid spending would affect these organizations. There was bipartisan agreement, however, among some members on addressing prior authorization policies in Medicare Advantage plans due to concerns with delays and denials of care.

More information on the hearing, including witness statements and a recording, can be found here.

Hospitals’ Continual Focus on Job #1 Leads to Better Care

While Massachusetts policymakers were focused last week on the cost of healthcare based on CHIA’s 2023 report, another report emerged detailing hospitals’ and health systems’ most important mission – ensuring safe and high-quality patient care.

Improvement in Safety Culture Linked to Better Patient and Staff Outcomes created by the American Hospital Association and Press Ganey found that patient safety, patient experience, and workforce experience have all improved, which in turn have led to better patient outcomes in a variety of measures.

Relying on data from 25,562 units across 2,430 acute care hospitals, the report shows how four key measures – catheter-associated urinary tract infection (CAUTI), central line-associated bloodstream infection (CLABSI), patient falls that result in harm, hospital-acquired pressure injuries (bed sores) – all have declined since their pandemic peaks.

Press Ganey’s analysis of responses from 13 million patients showed steady gains in their perceptions of both experience of care and safety of care after a drop due to the pandemic.

And an analysis of how healthcare workers feel about their work experiences and wellbeing also showed marked improvements. Workers showed steady improvement in measures relating to “activation” – or the feeling that their work makes a difference and is meaningful; and in “decompression” – meaning they are able to free their minds when away from work and disconnect.

“By improving the patient and workforce experience, identifying and addressing risks to patient or staff wellbeing, improving communications and understanding of what patients and their families value in their care experience, and implementing innovative strategies, hospitals will continue to demonstrate their commitment to patient safety,” the report found.

Nashoba Report: Local Hospitals Stepping Up to Fill Care Gap

The working group investigating the healthcare landscape in the Nashoba Valley following the closure of Steward Health Care’s Nashoba Valley Medical Center last week released its final report, which prioritizes the need for a satellite emergency facility, expanded outpatient services such as labs and imaging, and the need for greater access to specialists.

The report details the steps that nearby providers – including UMass Memorial Health and Emerson Health – have taken to fill the service gaps since Nashoba Valley Medical Center closed in August 2024. Since that closure, emergency department volume at UMass and Emerson have increased, as has volume at New Hampshire’s St. Joseph’s Hospital, and Southern New Hampshire Medical Center. Emergency transport times to those facilities have also risen.

To meet the need of communities in the service area, Emerson expanded urgent care hours at its facility in Littleton, opened an observation unit, increased transport services through new contracts with Brewster Ambulance, and hired new staff, including cardiologists and PCPs.

UMass Memorial Health committed to opening a new satellite emergency facility, but was unable to reach agreement with the owners of the now vacant medical center property. The report noted UMass is searching for another site, and the state is committed to expediting the permitting process. Even still, such a satellite facility will take at least 18 to 24 months to open after a site is found. In the interim, UMass Memorial Health and its Health Alliance-Clinton Hospital have created inpatient flex units to handle demand, refined ED workflows, added a new cardiology suite at Health Alliance Clinton, and hired new staff, among many other initiatives.

According to state officials, one proposal – creating a new hospital to replace Nashoba Valley Medical Center – is off the table, even though many commenters during the working group’s listening sessions advocated for such a facility. “The Nashoba Valley does not meet federal criteria for a rural designation or critical access hospital status, both designations that would offer additional federal funding” for re-establishing a hospital,” the state noted in a media release.

“This report represents an important step forward, but our work is far from finished,” said Ayer Town Manager Robert Pontbriand, who served as a co-chair of the working group. “We will continue to collaborate with all stakeholders to implement solutions, as practical, and strengthen the healthcare infrastructure that will improve the health of the residents of the Nashoba Valley.”

John LoDico, Editor