Massachusetts regulators ask Boston Children's to justify $1B expansion

The Massachusetts Department of Public Health is asking Boston Children's Hospital to show that its planned $1 billion expansion plan won't contribute to rising healthcare costs, according to The Boston Globe.

In a Feb. 11 letter, the DPH said the children's hospital must provide an independent analysis that proves the campus expansion project is "consistent with the Commonwealth's efforts to meet … healthcare cost-containment goals," according to the report.

Boston Children's Hospital plans to build an 11-story inpatient tower at its Longwood campus and an eight-story outpatient building in Brookline, making it the largest project seeking state approval, according to the report. The hospital says the need to expand is driven by an increasing patient population as more patients travel to Boston Children's from other states and counties.

Although large hospital construction projects require state approval, this is only the second time regulators have required a cost analysis before making a decision, with the first being imposed earlier this year on Salem, Mass.-based North Shore Medical Center. The hospital, which is owned by Boston-based Partners HealthCare, is planning a $180 million renovation and expansion of its own.

A Massachusetts law passed in 2012 gives public health officials the authority to request a cost analysis for large capital projects. The law also created a target of limiting statewide healthcare expenditure growth to less than 3.6 percent per year. Two new agencies — the Center for Health Information and Analysis and the Health Policy Commission — were also erected under the law to monitor health spending and scrutinize mergers and acquisitions that could lead to increased costs, according to the report.

The DPH's letter said Boston Children's Hospital will be responsible to find and pay for a qualified firm or individual to perform the cost analysis. The hospital is the dominant pediatric healthcare facility in Massachusetts, and is one of the most expensive healthcare providers in the state.

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