Massachusetts hospital spending out of control

Massachusetts Hospital Spending Reached 55.4% Per Person Above the U.S. Average in 2007

Most of Excess is Unjustified, and State's Health Reform Law Is Negligible Factor

Report by Alan Sager and Deborah Socolar
Boston University School of Public Health
March 16, 2010

This report documents and investigates the excess in Massachusetts hospital costs per person above the average for the United States. It examines the recent rise in this excess after a prolonged earlier decline, analyzes the many causes of the excess, assesses their reasonableness, and offers recommendations for addressing the state’s resurgent hospital cost crisis.


By Don McCanne, MD

It is difficult to reduce this complex 211 page report on the very high level of spending by Massachusetts' hospitals into a few paragraphs, but the title and subtitle alone deliver the dominant messages. For those who would like more insight without reading the full report, there is an excellent 30 page summary at the beginning the report.

For those following the health care reform process, one observation stands out. The Massachusetts health reform - a hybrid model of reform not unlike the proposal before Congress - was not a significant cause of the excesses in hospital costs. More importantly from the perspective of those of us concerned about reform, it played no role in slowing cost increases.

All nations struggle with rising health care costs, but all except the United States have been able to maintain a lower trajectory in those increases. Financing systems do make a difference, and they must enable strong government oversight to be effective. Fragmented hybrid systems such as that in Massachusetts, and, more importantly, that in the proposed federal legislation, are not particularly effective. The authors do not discuss this other than to state that in the United States, "Nationally, neither competitive forces of a market nor regulatory actions by government have succeeded in reining in health care costs generally or hospital costs specifically."

Sager and Socolar do reemphasize an important point that they have made many times about controlling costs: "it is fundamentally about liberating, enabling, and persuading physicians to spend money more carefully on behalf of their patients." That sure seems like it would be much easier in a single, publicly administered system devoid of the third party money manipulators.