Mass. agency says Boston Children's $1B expansion could raise state spending, shut down competing hospitals

In a report released Tuesday, the Massachusetts Health Policy Commission said it believes Boston Children's Hospital's planned $1 billion expansion would raise the state's annual healthcare spending by millions and even lead to the closure of smaller competing hospitals, according to The Boston Globe.

The expansion could raise spending in Massachusetts between $8.5 million and $18.1 million each year, the report says.

Here are five things to know about the Health Policy Commission's report and Boston Children's Hospital's response, according to The Boston Globe.

1. While Commissioner Wendy Everett said an $18.1 million increase out of the state's $20 billion in total annual commercial healthcare spending isn't significant, Stuart Altman, chairman of the Health Policy Commission, said the spending increase "could lead to another provider going out of business," according to the report.

"We're not in the business of picking winners and losers. And I believe in markets, and if left alone that's the way the market works, and it's because one is perceived to be better, that's ok," said Mr. Altman, according to the report. "But we can't rule out the implication that would have on cost... We're trying to do our job in a way that's appropriate. The ultimate decision is with the Public Health council."

2. The Health Policy Commission cited several key issues with Boston Children's expansion plan, which includes the construction of an 11-story clinical tower in Longwood, Mass., redeveloping a property in Brookline, Mass., for an outpatient center and renovating existing buildings on the Boston campus, according to the report.

3. The commission criticized the hospital's projections that it would see more out-of-state patients because historically, most patients have come from Massachusetts. It also noted that Boston Children's is among the most expensive pediatric hospitals in the state, and that if more patients are referred there from lower-cost facilities, overall healthcare spending in the state would rise.

4. As of 2015, Boston Children's already cares for 46 percent of the state's commercial pediatric patients, more than three-and-a-half times larger than its closest competitor, according to the Health Policy Commission. The commission said growing the hospital could destabilize its competitors, acquiring 24 to 44 percent of the current commercial pediatric volume, according to the report, which could ultimately lead to the closure of other pediatric programs.

5. Boston Children's Hospital spokesperson Rob Graham contested the commission's findings, saying the hospital "vehemently disagrees with the analysis and conclusions around cost, patient volume and market share."

"Boston Children's has consistently and aggressively taken strong steps to address costs and we are committed to adhering to the state cap on healthcare cost growth. Further, we've undertaken a broad strategy of helping to keep less complex care in the local community whether at community hospitals Boston Children's partners with or through collaborations with pediatricians among others," Mr. Graham said in a statement. "The data used by HPC is flawed, misleading and speculative. Even if HPCs worst case scenarios play out, the cost impact would equal a 0.033 percent increase in costs to Massachusetts consumers per HPC math."

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