By: David F. Torchiana, M.D., Partners HealthCare President and CEO

Tags: affordability , CEO Posts

This is the first in a series of occasional posts from Partners HealthCare President and CEO David Torchiana, M.D.

I was recently given the opportunity to talk about Partners HealthCare at a breakfast meeting of the Greater Boston Chamber of Commerce. The topics included concerns about the opioid crisis, our commitment to community health centers and population health management, and our Partners Massachusetts General Hospital (MGH) and Brigham and Women’s Hospital (BWH) programs to help area students through college, not just with financial support but with mentoring and academic support that would help to ensure that as many as possible could complete their course of study. Getting to college is only the beginning; graduating is the prize.

Since this was a business event, the region’s flourishing life sciences industry was also a principal topic. This sector of our economy has grown many times faster than competitor cities over the last 15 years, a development that can be traced to our concentration of great research universities and teaching hospitals. Four of the nation’s top five independent hospitals funded by NIH are in Boston, and the top two among them are MGH and BWH.

Top NIH-Funded Independent Hospitals

Partners’ institutions bring in $1.4 billion in research funding annually, creating thousands of jobs directly and tens of thousands indirectly. Partners receives more funding from the NIH in total than any university or research institute in the country, and in the last five years our hospitals’ research has spun off 84 start-up companies in eastern Massachusetts alone.

Research Leads to New Companies

The dynamic presence of the teaching and research programs at eastern Massachusetts hospitals are one of our region’s most vital assets in forming the world’s center for life sciences.

We are fortunate to have four medical schools in our state whose associated teaching hospitals are much sought after by the citizens of the region and have a larger market share compared to national norms. This structural difference in the eastern Massachusetts market is often pointed to as a driver of higher local health care costs. But there is a balance here – according to multiple Commonwealth Fund reports, we have the best health care in the nation as measured by quality, access and affordability. What the term affordability means in this context is that relative to the rest of the country, our insurance premiums are actually near the bottom when adjusted for the higher incomes of our population – i.e., lower than 80-90 percent of other states in relative terms – and with a generally favorable cost trajectory relative to the rest of the country for the last decade.

Does this imply that Massachusetts’ (or any other state’s) health care costs are affordable to individuals in an absolute sense and should be of no concern? Of course not – health care costs are one of our country’s fundamental challenges. At all levels of state, municipal and federal government, they crowd out other needed spending like defense, local aid, education and municipal services. For American business, uniquely challenged by the costs of the American system of employer-based healthcare for most people under 65, health care costs are a significant handicap – making it harder for big companies to compete in a global economy and a source of expense volatility and stress for smaller businesses. For individuals, paying out-of-pocket or facing higher co-pays and deductibles, health care costs have consistently outpaced real wage growth and are an intolerable burden. As a health care leader I am fully aware of this context and have been delivering this stark message on a daily basis for years. The hard part is how to make it better.

The first step to controlling costs is to manage them for the subset of patients where costs are the highest – 10 or 15 percent of our population generates two-thirds to three-quarters of costs annually, mostly because of chronic illness. We are committed to managing our costs – through moving care to community settings, like BWH Faulkner Hospital and our ambulatory care center in Danvers, and managing complex patients in our communities through programs like the Medicare Pioneer Accountable Care Organization (ACO). In the Pioneer ACO we have saved Medicare upwards of $40 million over three years. Its predecessor program at MGH dramatically reduced hospital and emergency department use and improved patient outcomes and well being. We invest over $50 million a year in these population health management activities; the list of initiatives is comprehensive. We are in the midst of implementing a new information system to support all administrative and clinical activities across Partners. This is a challenge for over 60,000 people to absorb and master, but once that is accomplished, the new system will be the backbone for improving our care and efficiency.

Reducing health care cost growth by changing the structure of health care delivery and improving the health of a population is a long-term, multi-year effort, but it is the only reform that will be durable. In recent years we have taken on risk contracts with rate increases limited to the level of general inflation and have struggled to balance our budgets as uncontrollable expenses steadily increase. This is not going to change in future years – managing down our costs and matching future cost growth to limited revenue is the most basic balancing act that our organization needs to accomplish. We are committed to managing to the cost growth benchmarks established by Chapter 224.

Partners is a complex system; some of our clinical programs succeed financially, many do not and so we cross subsidize. Our teaching hospitals are referral centers. One in six of our inpatients are transferred from other facilities to MGH and BWH but these institutions are also the community hospitals for local neighborhoods like Mission Hill, Roxbury, Jamaica Plain, Charlestown, Chelsea, Revere and Everett. We are committed to caring for all patients, from wealthy self-pay international customers all the way to uninsured patients in the local gateway communities that we serve. We have hospitals in affluent communities and in areas that are less well off. We believe strongly in the importance of community hospitals and health centers and the need for a balance between academic medicine and community medicine. We are actively engaged in confronting the challenge of disparities in healthcare outcomes by both measuring and stratifying our outcomes by race and ethnicity and seeking solutions when disparities are found. We also remain committed to behavioral health and rehabilitation as integral parts of the comprehensive delivery of good medical care. Defining appropriate care includes defining the right site of care, and while we are disappointed that we have been prevented from developing closer relationships with our longstanding community allies, we hope to maintain and strengthen these relationships in the most collaborative ways available.

Health care cost growth has exceeded the growth of the economy for decades. Changing this trend in a lasting way will be difficult, but solutions are known and we are going to pursue them relentlessly. Our job is to hold the line on costs while continuing to improve the health care we deliver to our patients through clinical care, service to the community, education and research. If we can do all these things well, we will change the world.

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