Business

State tells Boston Children’s Hospital to slow down

17hospital - Entrance to Boston Children’s Hospital. (Boston Children’s Hospital)
File/Boston Children’s Hospital

State regulators are asking Boston Children’s Hospital to show that its planned $1 billion campus expansion won’t undercut their efforts to restrain growth in health care costs.

In a Feb. 11 letter, the Department of Public Health said Children’s Hospital must provide an independent analysis that demonstrates the project is “consistent with the Commonwealth’s efforts to meet . . . health care cost-containment goals.”

Large hospital construction projects must be approved by the state, but this is only the second time regulators have asked for this sort of cost analysis before making a decision. Regulators requested a similar report earlier this year from North Shore Medical Center, a hospital owned by Partners HealthCare, which is planning a $180 million renovation and expansion at its Salem campus.

Advertisement

The Children’s Hospital project is the largest seeking state approval. Children’s plans to build an 11-story inpatient tower at its Longwood campus and eight-story outpatient building in Brookline, saying it is running out of space as it draws a growing number of patients from other states and countries.

Get Talking Points in your inbox:
An afternoon recap of the day’s most important business news, delivered weekdays.
Thank you for signing up! Sign up for more newsletters here

“We look forward to providing the DPH with further detail around costs associated with expanding access to inpatient, [newborn intensive care] and surgical programs at Boston Children’s Hospital,” Kristen Dattoli, a hospital spokeswoman, said in a statement. “We have been clear and consistent that . . . the improved and expanded clinical spaces should have no significant impact on health care costs in the state.”

A state law passed in 2012 gave public health officials the authority to request a cost analysis for large capital projects. That same law set a target of keeping statewide health spending growth to less than 3.6 percent a year. The law created two agencies, the Center for Health Information and Analysis and the Health Policy Commission, to monitor health spending and study mergers and acquisitions that have the potential to drive up costs.

In their letter, public health officials told Children’s Hospital to find a “qualified firm or individual(s),” subject to their approval, to perform a cost analysis. The hospital also must pay for the study. Children’s Hospital, the dominant pediatric hospital in Massachusetts, is among the most expensive health care providers in the state.

The hospital’s expansion plans are controversial because they would require building over a beloved garden. A group working to save that green space, called Friends of the Prouty Garden, applauded state officials’ call for more information, because it would delay the project.

Advertisement

“This puts the brakes on the hospital’s apparent game plan to win an immediate approval,” said Gregor McGregor, a lawyer representing the group.

Priyanka Dayal McCluskey can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.