Massachusetts' biggest hospitals are also the most expensive, CHIA report finds - Boston Business Journal

DATE: August 17, 2023

Hospital executives recognize how much more expensive it is to care for patients in academic medical centers, and are making efforts to keep patients local. 

It's significantly more expensive to receive health care at an academic medical center, such as Massachusetts General Hospital, than it is to receive care in a community hospital, new data confirms.

That fact is often discussed within the healthcare industry, but a report released early Thursday by the state Center of Health Information and Analysis puts numbers to the price differences of the region's research hospitals versus smaller, community hospitals. 

According to the report, academic medical centers reported prices 9% above the statewide average in 2021. Mass General Hospital and Brigham and Women’s Hospital are the most expensive such medical centers, according to CHIA, while Boston Medical Center is the least expensive. 

CHIA's report is an annual update on so-called "provider price variation" for hospitals and physician groups in the Massachusetts commercial health insurance market. Data for 2021 is the most recent available.

Teaching hospitals such as Cambridge Health Alliance or Brigham and Women’s Faulkner Hospital were 4% cheaper than the statewide average, the newly released data showed. 

Community hospitals were overall 7% cheaper than statewide average, with Nantucket Cottage Hospital and Martha’s Vineyard Hospital being among the most expensive in this category.

Lastly, community hospitals with a high level of public payers — federal or state government insurance payers such as Medicare or Medicaid — were 8% cheaper than statewide averages. Falmouth Hospital and Cape Cod Hospital are the most expensive of the hospitals with a high public-payer mix, according to CHIA data.

Differences in patients, sicknesses, services

In its analysis, CHIA compares average provider prices, taking into consideration the differences in the level of sickness among patients, since the academic medical centers often treat more-complicated patients; the types of services providers deliver to patients; and the types of insurance products offered by payers.

“Provider price and the variation in prices across Massachusetts offers valuable insights into provider financial performance and overall market dynamics,” said Lauren Peters, executive director of CHIA, in a statement. “CHIA’s latest report on relative price provides continued transparency into the commercial health insurance landscape and informs more targeted policy interventions to promote provider financial stability, health care affordability, and access in the commonwealth.”

Hospital executives themselves say they recognize how much more expensive it is to care for patients at large academic medical centers, and they are making efforts to keep patients local. Mass General Brigham recently launched a "patient transfer and access center," a move to improve patient flow throughout the system. This center is a designated team to strategize how to move patients around the system and into care where it's cheapest and most efficient.

"Part of our overall strategic priority was really moving out patients from the academic medical centers who didn't need to be there and providing care at lower-cost settings, whether it's in a community hospital, or whether it's in an ambulatory setting," MGB CEO Anne Klibanski told the Business Journal in June.

Also to address capacity, Tufts announced a new clinical affiliation last week with Sturdy Health to keep patients who don’t need to be at Tufts Medical Center, an AMC, in community hospitals. 

“If we're successful, we'll show that we're actually able to keep higher-acuity patients local, and that is measurable,” Michael Tarnoff, CEO of Tufts Medical Center, said.

But while charging the most, academic medical centers also pay their executives the most, according to 990s obtained by the Business Journal. While MGB charges the most for care, it also pays its executive the highest salary, with Klibanski reporting compensation of $5.38 million.