Dive Brief:

  • Mass General Brigham, under pressure from state regulators to rein in spending, has submitted a performance improvement plan that proposes a healthcare cost savings target of $105 million over an 18-month period.
  • Mass General was forced to come up with the plan after the Massachusetts Health Policy Commission, an agency tasked with monitoring and controlling healthcare spending, determined in January that the hospital system’s spending threatened to derail the state’s health cost containment efforts.
  • The commission said it will review Mass General’s proposal to decide whether it is likely to address the underlying causes of its cost growth and whether the system is capable of successfully implementing the plan.

Dive Insight:

Massachusetts’ Health Policy Commission assessed Mass General’s performance from 2014 to 2019, concluding that the system had more cumulative commercial spending growth in excess of the state’s cost benchmark than any other provider, totaling $293 million. Mass General’s hospital and physician prices were also higher than nearly all other providers.

With the state’s total healthcare spending growing at a rate of 3.6% in 2018 and 4.3% in 2019, faster than its benchmark rate of 3.1%, the commission determined that Mass General’s spending was a likely driver of the overruns. The agency found Mass General’s cost control strategies did not appear to have brought its commercial spending growth below benchmark rates.

“MGB’s spending growth has likely already impacted the state’s ability to meet the healthcare cost growth benchmark and, unless addressed, is likely to continue to impact the state’s ability to meet the benchmark,” the commission said in a statement Tuesday.

The performance improvement plan, the first ever required by the commission to address healthcare spending concerns, is intended to hold Mass General accountable under state law. The agency said it will evaluate the plan submitted by the hospital system for its ability to help the state achieve “meaningful and sustainable” healthcare cost savings.

Mass General’s proposal contains four strategies aimed at generating $70 million in annual spending reductions: reducing utilization, for $10.8 million in savings; shifting care to lower cost sites ($5.3 million); price reductions ($53.8 million); and enhancing accountability through value-based care.

“Mass General Brigham is fully committed to working in a more rigorous partnership with the state to lower the cost of health care in Massachusetts, while building a new lower-cost continuum of care and ultimately improving patient outcomes,” the system said.

Mass General earlier this month got the nod from the state’s Public Health Council to move ahead with plans to construct a $1.9 billion tower at Mass General Hospital and $150 million expansion at Brigham and Women’s Faulkner Hospital in Boston.

The capital project, which originally included a proposal for three new ambulatory surgery centers in the Boston suburbs at a cost of about $224 million, was pared back after the Health Policy Commission warned the plan could draw patients away from other, less expensive providers.

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