Families may face higher costs when Tufts Children’s Hospital closes

When Tufts Medical Center shutters its pediatric hospital this summer, the move will make Boston Children’s Hospital, already the dominant and most expensive pediatric hospital in the region, even more powerful and could force insurers and families with sick children to pay more for health care.

Tufts announced last month that it would close its 41 pediatric beds in July and refer patients to Boston Children’s, its former rival. Tufts leaders said their pediatric units often lie half empty and could be better used to treat the hundreds of adults they turn away each month for lack of beds.

The decision, which requires a review from state officials, came as a shock to doctors, nurses, and parents of young patients.

Boston Children’s has developed a reputation for treating children with complex diseases from around the world and is the top-ranked pediatric hospital in the country by US News & World Report. But state data show it’s also the most expensive academic medical center in Massachusetts.

For patients with coverage through Blue Cross Blue Shield of Massachusetts, the state’s largest health insurer, pediatric health care is 25 percent more expensive at Boston Children’s than at Tufts, according to data the state Center for Health Information and Analysis compiled at the Globe’s request. For patients with Harvard Pilgrim insurance, Boston Children’s is 29 percent more costly. Insurers pass these higher prices on to families through premiums and out-of-pocket costs.

Without Tufts’ pediatric hospital, doctors and health care market experts warn, there will be less competition to hold Boston Children’s and its prices in check — potentially making it harder for the state to control health care costs.

“I’ve had patients tell me if they have to go to a different hospital, they will be paying more out of pocket,” said Dr. Anthony Rodrigues, a pediatric neurologist at Tufts.

Rodrigues, who treats children with epilepsy and movement disorders, said he’s worried patients could struggle to afford their care without Tufts as an option.

Each family’s costs will depend on their health plan; for some, out-of-pocket costs may be higher at Boston Children’s. For others, the effect will be felt in monthly premiums.

For some services, the price differences are particularly stark. For patients with Blue Cross insurance, an emergency department visit for a severe but not life-threatening issue cost $633 at Tufts Medical Center; at Boston Children’s it was $1,686, according to state data from 2017, the most recent year for which data are available. Patients paid a share of these costs; insurers paid the rest.

“With Tufts gone, Children’s will be in an even stronger position to dictate prices to the commercial payers, and some of those rates are exorbitant,” said David E. Williams, president of Health Business Group, a Boston consulting firm.

Already, Boston Children’s prices are enough of a concern that insurers sometimes try to dissuade patients from seeking care there by imposing higher out-of-pocket costs.

“With care being transferred to higher-cost settings, this closure runs counter to policy goals of the Commonwealth, where we seek to contain cost by driving care to high-quality, lower-cost settings,” said Lora Pellegrini, president of the Massachusetts Association of Health Plans, which represents insurers.

Blue Cross spokeswoman Amy McHugh said losing Tufts as an option for children who need inpatient care could lead to higher prices at a time when hospital and pharmaceutical costs are already growing at a “worrying” pace.

Tufts leaders argue that in a broader sense, their plan will ultimately save health care costs because it will allow them to treat more adult patients who would otherwise go to more expensive hospitals, such as Massachusetts General and Brigham and Women’s.

Sixty-five percent of children treated at Tufts are covered by the public Medicaid program, which covers the full cost of their health care, so they won’t be affected by the higher prices at Boston Children’s, according to officials at both hospitals. Among Tufts’ current patients, only 13 children have insurance plans that Boston Children’s doesn’t accept, according to Tufts.

“Going forward, we will work to ensure every patient has access to care,” Tufts spokeswoman Rhonda Mann said.

The plan has yet to be reviewed by state officials, including the Department of Public Health. It may also be studied by the Health Policy Commission, which monitors how hospital deals affect costs and access to care.

Paul Donovan, a Boston Children’s spokesman, said the hospital will work with insurers in the “rare” instances when its services are out of a patient’s network.

Donovan said the hospital’s prices account for the fact that it treats many children with complex conditions who require frequent admissions, long stays, and expensive treatment.

“We treat more pediatric patients with rare diseases and complex conditions than any other hospital in the world,” he said.

The hospital’s new partnership with Tufts comes on top of two other moves that could boost its business. Boston Children’s is seeking approval for a $435 million plan to expand outpatient services in Waltham and Weymouth and build a surgery center in Needham.

In addition, the hospital is planning to acquire Franciscan Children’s as part of a strategy to expand treatment for mental health conditions.

“It’s an ongoing trend of more consolidation, and bigger and wealthier institutions just getting bigger and wealthier,” said John E. McDonough, a professor at the Harvard T. H. Chan School of Public Health.

McDonough said state officials should consider the cumulative impact of these developments.

“That’s a good question for the Health Policy Commission,” he said. “There are reasons for concern, and it bears further analysis and study.”

Boston Children’s is also in the final stages of a project to open a new clinical building at its main campus in the Longwood Medical Area. Eventually, this will increase the hospital’s capacity from about 400 beds to 475.

This expansion stirred controversy before it was approved in 2016, and Tufts even opposed the project over concerns that Boston Children’s would try to pull patients from lower-cost competitors.

Now, Tufts is essentially handing its patients over to Boston Children’s.

Some families could choose to go elsewhere. For children with the most complex medical conditions, MassGeneral Hospital for Children will be the only other option in Boston, said Dr. Ronald E. Kleinman, chair of pediatrics at Mass. General.

Kleinman said he’s deeply disappointed that Tufts will close inpatient pediatrics, and he’s concerned the move will make Boston Children’s more powerful. (Mass. General is the state’s biggest hospital, but its pediatrics business is smaller than Boston Children’s.)

“Having one very dominant and very expensive provider is not good for our area,” he said. “Regulators need to recognize that. We want to provide some choice always.”

On Friday, Tufts leaders officially notified the Department of Public Health of their intent to close inpatient pediatrics. The department requires that they submit detailed plans at least 90 days before the closure and explain how they will ensure patients have access to essential care.

The state will hold a public hearing, likely this spring.

Along with the Health Policy Commission, Attorney General Maura Healey also may review the new partnership with Boston Children’s.

Healey said in a statement that she was disappointed to learn of the closing. “What’s important now is that a process is put in place that will ensure patients continue to get the high-quality, low-cost care they need and deserve,” she said.

Broader trends in health care are driving their decision, Tufts leaders said, including the national decline in the number of children who require hospitalization as more care shifts to outpatient settings. Tufts plans to keep outpatient services for children open.

“Pediatric care is changing,” Tufts’ chief executive, Dr. Michael Tarnoff, said in a recent e-mail to employees. “We are now in a position to help lead that change through an innovative approach with BCH.”

“We are a great organization,” he added, “and great organizations have to make difficult, if not agonizing, decisions from time to time.”