Business & Tech

Heads of largest hospitals question state Senate health plan

Massachusetts Senior Action Council members held signs Monday at a State House health care hearing.
David L. Ryan/Globe Staff
Massachusetts Senior Action Council members held signs Monday at a State House health care hearing.

Leaders of the state’s two largest hospitals made a rare appearance Monday on Beacon Hill to warn state senators against approving any policies that would slash their revenues in order to rein in health care spending.

Massachusetts Senate leaders, as part of a sweeping bill designed to improve the state’s health care system and control costs, are seeking to control spending by hospitals. Their plan, unveiled last week, would allow for higher insurance reimbursements for the state’s least expensive hospitals, while potentially fining the hospitals where spending is highest.

But the chiefs of Massachusetts General Hospital and Brigham and Women’s Hospital asked lawmakers to reject any measure that would punish the two academic medical centers, which are hubs for research and major employers in Boston.

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“In my mind, this represents an unfair legislative attack on the future of Mass. General and Brigham and Women’s hospitals,” Dr. Peter L. Slavin, president of Mass. General, told a packed hearing room at the State House.

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Dr. Elizabeth G. Nabel, president of the Brigham, said financial penalties “would impose direct damage” on the hospitals’ ability to serve poor patients on the government Medicaid program, a population on which they already lose money.

Mass. General and the Brigham both are owned by Partners HealthCare, the state’s largest health system, and are among the most prestigious and most expensive hospitals in Massachusetts.

The Senate bill tries to address the longstanding issue of price variation — insurance companies paying some hospitals far more than others for providing the same services — and by doing so has reopened a rift in the Massachusetts hospital industry.

Hospitals already face pressure to control costs. In Massachusetts, they’re required to keep annual increases in spending to 3.6 percent. The Brigham recently launched a cost-cutting plan that includes buyouts for hundreds of employees.

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Karen E. Spilka, the House budget chief, said they should “roll up [their] sleeves” and continue working to contain costs.

“We only have one pot of money,” said Spilka, an Ashland Democrat, “so how is that pot distributed among all the hospitals and providers in the Commonwealth?’

Massachusetts General Hospital president Dr. Peter L. Slavin and Brigham and Women’s Hospital president Dr. Elizabeth G. Nabel gave testimony at the Senate health care hearing.
David L. Ryan/Globe Staff
Massachusetts General Hospital president Dr. Peter L. Slavin and Brigham and Women’s Hospital president Dr. Elizabeth G. Nabel gave testimony at the Senate health care hearing.

Several leaders of community hospitals, which have struggled to compete against larger health systems with greater market clout, are backing the Senate bill. The legislation would set a floor for hospital payments to bring the lowest-paid hospitals closer to average.

Dianne J. Anderson, chief executive of Lawrence General Hospital, called the Senate effort a “glimmer of hope” for community hospitals.

“Our hospitals provide the same quality and outcomes and . . . our low relative price is unwarranted,” Anderson said. “We need to be sustainable.”

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Slavin pushed back against the notion that community hospitals provide the same quality of care as large academic medical centers, noting that Mass. General and the Brigham care for many patients who were transferred from other hospitals.

A challenge for legislators trying to prop up struggling community hospitals — often major employers in their cities — is how to raise their payments from insurers without driving overall health care spending higher. The senators’ solution was to set a target for spending across the hospital industry. If the industry crosses that threshold, the hospitals with the highest spending would be fined.

The Massachusetts Health & Hospital Association, a trade group, is taking a position that attempts to straddle the divide among its members.

“Commercial payment rates to the lowest-paid hospitals should be increased,” said Michael E. Sroczynski, vice president of government advocacy for the hospital association. “[But] MHA members are opposed to the imposition of artificial caps on rates and the direct redistribution from one hospital to another as a mechanism to reduce variation.”

Massachusetts has been debating price disparities in health care for many years. A special commission studied the issue and released a report earlier this year calling for tighter regulation to control hospital costs. But members of that panel remained divided after months of discussion.

The Senate bill, in addition to tackling hospital spending, also seeks to curb prescription drug spending by requiring drug companies to submit more data to the state Health Policy Commission, a watchdog agency. In addition, the legislation includes provisions on telemedicine, paramedicine, mental health, and many other aspects of health care.

It does not include several ideas from Governor Charlie Baker to curb spending in MassHealth, the state Medicaid program, in part by changing eligibility rules.

Senate leaders have said they want to pass a health care bill in November. But House leaders have indicated they’re reluctant to consider any major health care legislation at a time of so much uncertainty in Washington, when President Trump and Republicans in Congress are trying to roll back the Affordable Care Act.

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