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Billions Are Being Wasted in the Massachusetts Health Care System

There isn’t a link between high-spending hospitals and high quality.

© iStockphoto.com/AlexRaths
© iStockphoto.com/AlexRaths
By Les Masterson

As much as $27 billion is wasted in the Massachusetts health care system. This is as much as 39% of health care expenditures in the commonwealth.

The state’s Health Policy Commission released a report on Wednesday about the Massachusetts’ health care delivery system and examined cost drivers, such as hospital operating expenses, wasteful spending and high-cost patients.

The HPC said “wasteful spending” could be eliminated in health care without harming the quality of care and wasteful spending actually “often results in poorer outcomes for patients.”

In 2012, between 21% to 39% ($14.7 billion to $26.9 billion) of health care expendistures in Massachusetts “could be considered wasteful.” This includes $700 million wasted in “preventable acute hospital readmissions,” $550 million in “unnecessary emergency department visits,” and $10 to $18 million in “health care-associated infections.”

The report found that “operating efficiency” varies greatly between hospitals. In fact, some hospitals deliver high-quality care with lower expenses while other higher-expense hospitals are lower quality. Operating expenses in acute hospitals for inpatient care differ by thousands of dollars per patient, according to the report.

The HPC released preliminary cost trends findings last month that showed that Massachusetts has the highest per capita health care spending in the country. Nearly 17% of the Massachusetts economy was spent on personal health care expenditures in 2012, compared with 15.1% in the US.

“Over the past decade, Massachusetts health care spending has grown much faster than the national average,” according to the report.

But there is a way to reduce costs. “Improving hospital efficiency” is one way to reduce spending while not impacting quality of care.

 

High-cost patients

The report also said that 5% of patients account for nearly half of all spending in Medicare and Medicaid in Massachusetts.

“The presence of multiple conditions, such as behavioral health and chronic medical conditions, increases spending more than the combined effects of individual conditions, and illustrates the complexity of managing multiple conditions simultaneously,” according to the report.

Read more about the HPC’s Annual Cost Trends Report here.

dennis byron January 10, 2014 at 10:22 AM
Unfortunately, all this is a political-propaganda press release. There is no substance behind the claim that between $15B and $27B is wasted. The report only identifies about $1.5B (10% of the supposed low-end total) and it gives no explanation of how the Commission calculated that number or whether it is a subset of the $15B or the $27B. The taxpayers have been poorly served by the millions of dollars being wasted by this commission. (Oh, and it took millions of wasted taxpayer dollars to "discover" the 80/20 rule, which the commission has rewritten as the 50/5 rule to make it sound like an accomplishment.)
Chris Helms (Editor) January 10, 2014 at 11:34 AM
Thanks for the critical read, Dennis!

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