State’s Healthcare Cost Growth is Below Benchmark

The Massachusetts growth rate for total healthcare spending was 2.8% for 2016, well below the state benchmark of 3.6%, according to a new report from the state’s Center for Health Information and Analysis (CHIA).

In the previous two years (4.8% in 2015 and 4.2% in 2014), the growth rate exceeded the state-set benchmark.

In its report, the state teases out the various parts of the Massachusetts healthcare system to determine how each sector came in above or below the benchmark. As in previous years, pharmacy spending exceeded the mark and hospital inpatient expenses were below the benchmark. However, this year, hospital outpatient expenses exceeded the benchmark for the first time. CHIA did not have an explanation for outpatient expense growth and the Health Policy Commission said the issue merits further attention.

MHA President & CEO Lynn Nicholas, FACHE said, “It is likely that a number of factors are propelling this change, including the transition of increasingly complex surgery from inpatient to outpatient settings, more encouragement for patients to have diagnostic/preventive screenings such as mammograms and colonoscopies, higher costs for pharmaceuticals that are administered in outpatient settings, and growing use of observation services, which are considered outpatient care while physicians determine whether a patient needs to be admitted. Hospitals have been investing heavily in outpatient care and ambulatory care facilities to be able to provide care in the most appropriate setting, in line with state and federal policy directives.  It’s possible that CHIA’s most recent report is reflective of this investment.”