Patient perception of value and hospital choice, patient migration and payer mix are among the most serious challenges facing community hospitals in Massachusetts, according to a study released earlier this week by the Massachusetts Health Policy Commission.
The report, which is entitled "Community Hospitals At A Crossroads: An Examination of the Massachusetts Health Care System", was inspired by the closings of North Adams Regional Hospital and Quincy Medical Center. It is based on more than a year's worth of research, analysis and interviews with a wide range of subjects from providers and payers to elected officials and academics, the Commission said in a statement.
The study identified a wide swath of barriers that it said "make the traditional community hospital operating and business models unsustainable."
First, analyses showed that patients frequently pass up their community hospital in lieu of academic medical centers(AMC's) or teaching hospitals for routine care that could have been provided at the community hospital. This is largely attributed to the prevalence of physician referral networks, patients basing decisions on the past experiences of friends and family, and a belief that higher prices mean higher quality.
Thanks to several years of steady consolidation of providers, a small number of health systems are providing most of the care, especially when it comes to primary care. "Primary care providers (PCPs), which are instrumental to facilitating how patients move across the health care system, are increasingly affiliated with large systems. The HPC found that the percentage of patients affiliated with the largest 8 systems grew from 62% to 76% from 2008-2014," the study said.
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Another major concern, according to the study and the Commission, is the volume of patients from all over the state that migrate to Boston hospitals for care that costs more, including non-complex care, that could have been provided at a community hospital. A prime example is childbirth. Data shows the number of deliveries in community hospitals has dropped from 74 percent in 1992 to 50 percent in 2012, a total decrease of 24 percent. Additionally, 25 percent of patients that are discharged from AMC's in Boston were from outside the city, the Commission findings said.
The payer mix in a hospital system exerts enormous influence over its financial success and stability, or lack thereof, said the commission. For community hospitals, a large share of their patients are covered by government payers, and that means lower rates than for commercial patients.
Many community hospitals also suffer from a disproportionate share of what are referred to as "lower-margin services". For example, across the state little more than 50 percent of community hospitals' medical/surgical and obstetrics beds are occupied, while nearly 100 percent of their psychiatric beds are filled.
"The HPC further found that hospitals with a higher public payer mix tend to have lower relative prices, compounding financial stresses. This directly contradicts a common argument by higher priced hospitals that their prices are necessary to cover losses from caring for publicly-insured patients," the study said.
These trends only exacerbate the impact of a projected continued downturn in the need for inpatient care over the next decade by 15 percent, along with the reality that community hospitals tend to have lower occupancy rates than AMC's and teaching hospitals. Patients deferring to retail clinics and urgent care centers causes additional strain.
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Community hospitals are also struggling to recruit and retain staff, purchase new technology including telehealth, upgrade ehr's and develop capabilities to monitor performance and analyze data, the study showed.
Looking ahead to potential solutions, the report pinpoints three principle areas that need further discussion: "planning and support for community hospital transformation, encouraging consumers to use high-value providers for their care, and creating a sustainable, accessible, and value-based payment system."
The HPC will convene key stakeholders, including community hospital CEOs, consumer advocacy groups, business organizations, payers, commonwealth agencies, and other important participants on March 29, 2016 at 9 a.m., to discuss challenges and opportunities for community hospital transformation across the Commonwealth.
Twitter: @BethJSanborn