As the country gets ready for the roll out of the major components of the Affordable Care Act, stakeholders can look to Massachusetts, where healthcare reform was enacted seven years ago. The second installment of PwC Health Research Institute’s The Massachusetts Experience, released Thursday, provides analysis on the effects of rapid insurance coverage expansion on health payers and providers in the state.
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“The system is just changing so dramatically right now,” said Richard Aghababian, MD, immediate past president of the Massachusetts Medical Society, in the PwC report. “Massachusetts is really the canary in the coal mine for the ACA.”
Major regulatory changes have driven industry consolidation in Massachusetts, PwC’s report noted. Nearly one-third of the 70 acute care hospitals in the state have been involved either in a merger, acquisition or partnership since 2007, especially in the last three years. Another 20 percent are in various stages of discussion. Only about 9 percent of Massachusetts hospitals are entirely independent, raising doubts about the long-term viability of stand-alone community hospitals, the report said.
The brisk pace of activity in Massachusetts reflects broader consolidation across the country, said Robert Valletta, PwC U.S. healthcare provider leader, in a news release about PwC’s analysis. “Our analysis suggests the lessons learned in Massachusetts can offer insights to health industry executives across the nation as they prepare to adapt to the new landscape.”
What all this activity means for health plans, PwC’s data suggests, is that plans may encounter financial instability and turbulence after health reform changes take effect.
While the new enrollment in Massachusetts led to higher combined revenues across the state's 10 largest health plans, profits varied widely in the years following enactment of the law dues to additional regulatory fixes and the effects of the downturn in the broader economy, PwC found. Per member profits also fluctuated.
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For providers in Massachusetts, profit margins leveled out. Between 2005 and 2010, academic medical centers saw a 1.4 percent margin increase, while other hospital types saw increases below 1 percent over the same period, the report said. At the same time, the gap between financially successful hospitals and those on the edge widened.
Hospitals in the state have experienced a decline over time in the use of emergency departments as consumers have accessed primary care in lower-cost settings and health status of residents has improved somewhat.
At the same time, average wait times are high for new patients seeking a primary care physician, for example, 45 days for family medicine and 44 days for an internist, according to a Massachusetts Medical Society survey that PwC cited. Half of primary care doctors said they are accepting new patients, the report said.
Still an unknown but something that must be considered in future analyses is the state’s 2012 cost containment law that pegs health spending to the state’s overall economic growth, calls for greater transparency around hospital, health system and insurer costs to encourage consumer price sensitivity and requires that the state use its purchasing power to shift state-funded healthcare programs and Medicaid to providers that move away from fee-for-service to more efficient delivery and value-based payment models. If successful, it is estimated that Massachusetts could save about $200 billion over the next 15 years, the report said, citing state budgeters.
[See also: Physician shortages threaten care in Massachusetts, report indicates]
Boston State House photo courtesy of Shuttershock.com.