The Boston Community Report: Comparisons to the Nation

1
The Boston Community Report Comparisons to the
Nation

• Paul B. Ginsburg, Ph.D
• Presentation to Massachusetts Medical Society
  October 21, 2003

2
Key Points (1)

• Some problems facing Boston seen most other
  places
• Rising costs and premiums
• Potential for declining insurance coverage
• Consolidated hospital and health plan markets
• Boston has some unique problems
• Physician shortages
• Crowded academic medical centers and empty
  community hospitals

3
Key Points (2)

• Boston has avoided some problems
• Boom in specialty facilities
• Boston a leader in certain areas
• Patient safety and quality
• Electronic medical records
• Successful efforts to expand insurance coverage
• Strong safety net

4
Center for Studying Health System Change (HSC)

• Research on changes in the organization and
  delivery of care -- and their impact on people
• Objective information for policy makers
• Funded by The Robert Wood Johnson Foundation
• Emphasis on health care markets
• www.hschange.org

5
The Community Tracking Study (CTS)

• Multiple data sources
• Surveys of households, physicians, employers
• Site visits
• Community focus
• 60 communities that are nationally representative
• Longitudinal design
• Data collected on a regular basis (1996,
• 1998, 2000, 2003)

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HSC Focuses on Communities

• Health systems are local
• Longstanding organizations shape response to
  current forces
• Build a national picture
• Distinguish between uniformity and variation

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Perspective on Community Variation

• Mid-1990s theory
• Stages of managed care
• Perspective from 2003
• Uniform national drivers of change
• Similarities in response of system
• Differences stemming from longstanding
  organizations and culture

8
Longstanding Boston Distinctions (1)

• Fewer uninsured
• State policies
• Culture promoting insurance
• Lack of dominant local employer
• Increasingly the case nationally
• Dominant local health plans
• Little presence of national plans

9
Longstanding Boston Distinctions (2)

• Academic medical centers large part of hospital
  system
• Physicians closely aligned with hospital systems
• Extensive state regulation

10
Rising Premiums

• National 2003 premium trend 14 percent
• Average buydown of 3 percent
• Cost trend is lower and moderating slightly
• Boston trends probably similar

11
Anatomy of Rising Costs

• Rapidly growing sectors
• Ambulatory procedures
• Pharmaceuticals
• Price and utilization trends both important
• Hospital story differs from physician story

12
Employer Response to Rising Premiums (1)

• Little erosion of employer offering
• Little interest in revisiting restrictive managed
  care
• Increased cost sharing
• High-deductible plans appearing in Boston

13
Employer Response to Rising Premiums (2)

• Interest in savings account plans but little
  adoption
• Pessimism about potential of market forces

14
Competition in Health Plan Market

• Increased consolidation
• Mergers of small plans into large ones
• Exits of some national plans
• Entry will occur when cycle turns
• Decreasing plan leverage with hospitals
• Continued strong leverage with physicians
• Notable exceptions for large single-specialty
  groups

15
Hospital Capacity and Investment

• Capacity generally tight
• Reflects turnaround in utilization trends
• Facilities and labor constraints
• Added factor in Boston is shift to AMCs
• AMCs making system hospitals more attractive
• Revival of medical arms race
• Forecasts of demand growth
• Expand capacity for lucrative specialty services
• Cardiovascular
• Orthopedic
• Potential contribution to rising costs

16
Physician Capacity

• Strains are evident nationally
• Waiting times for appointments
• Role of sharp increases in utilization
• Potential for slowing of utilization trend
• Boston has more severe strains
• Waiting times are longer
• Extensive reports of unfilled positions
• Will the market respond?

17
Expansion of Physician-Owned Facilities

• Specialty ASCs
• Equipment within medical practices
• Reasons for expansion
• Depressed payment rates for professional services
• Distortions in facility payment rates
• Role of changes in CON

18
Community Concerns about Specialty Facilities

• Financial impacts on hospitals
• Potential for overuse
• Self-referral incentives
• Supply creating demand
• Costs of excess capacity

19
Health Care for Low-Income Persons

• Boston a leader
• Low rate of uninsured
• Strong safety net
• Medicaid cuts resisted in most states
• Safety nets have strengthened
• But challenges ahead
• Increasing interest in universal coverage

20
Quality and Patient Safety

• Most employers believe quality is very good
• They have not pushed hard for improvement
• Boston distinctive for magnitude of efforts to
  improve quality
• Leapfrog
• Pay for performance
• Electronic medical records

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Efforts to Address Cost and Quality Problems (1)

• Decline in confidence about potential of market
  forces
• Lack of expectation of quick solutions
• Growing interest in government solutions
• Hospital-led initiatives to revive CON
• Role in provision of information on provider
  quality
• Most thinking not concrete

22
Efforts to Address Cost and Quality Problems (2)

• Dominant health plans or hospitals face public
  utility pressures
• Partners campaign to justify rate increases
• Little scrutiny of other Boston hospitals

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Concluding Thoughts

• Boston health system faces pressures similar to
  other communities
• Threat that rising costs will hurt economy and
  lead to more uninsured
• Key Boston advantages
• Fewer people are uninsured
• Extensive community leadership
• Public and private sectors