3 Key Findings on Healthcare Costs in Massachusetts

The Massachusetts Health Policy Commission has released its first annual cost trends report examining three significant cost drivers: hospital operating expenses, wasteful spending and high-cost patients.

During the past decade, Massachusetts healthcare spending has ballooned faster than the national average. Spending on personal healthcare services went from 12.8 percent of the state economy in 2001 to 16.6 percent in 2012, according to the report. In 2012, the U.S. overall devoted 15.1 percent of its economy to personal healthcare spending.

Here are three key observations from the report on what's behind high healthcare costs in Massachusetts.

1. In 2012, an estimated 21 to 39 percent ($14.7 billion to $26.9 billion) of healthcare spending in the state could be considered wasteful, meaning the expenditures could be eliminated without harming consumers or reducing quality of care. The report identifies $700 million in preventable acute-care hospital readmissions, $550 million in unnecessary emergency department visits and $10 million to $18 million in healthcare-associated infections, among other unnecessary spending.

2. Just 5 percent of patients account for almost half of all spending for the Medicare and commercial payment populations in Massachusetts. People with multiple conditions such as chronic illnesses and behavioral health problems tend to cost more, according to the report. Furthermore, patients who remain high-cost for multiple years represent 29 percent of high-cost patients and account for 15 to 20 percent of Medicare and commercial spending in the state.

3. The report identifies improving hospital efficiency as an opportunity to cut costs without reducing quality. Even after adjusting for regional wage variations and the complexity of patient needs, hospitals with higher operating expenses spent 23 percent more than those with lower operating costs to provide the same services.

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