The true cost of healthcare in Massachusetts

THERE IS tremendous concern right now about the rising cost of healthcare, which is forcing employers, municipalities, and individual consumers to scale back or drop their insurance coverage and jeopardizing the health gains that we as a nation have made. The growing price tag is a national problem, not just a Massachusetts problem, and must be tackled both nationally and locally. Yet, there are some who argue that Massachusetts is an outlier when it comes to healthcare costs, with per capita spending that far exceeds the national average.

So what are the real facts? According to a recent report by the Massachusetts Business Roundtable, the state's medical plan costs were once among the highest in the nation. But because of what the Business Roundtable describes as ''substantial effort" by the state's healthcare providers to improve efficiency, health insurance premiums in Massachusetts are now only slightly above the US average and generally comparable with surrounding states.

The report also points out that major changes have taken place in the Massachusetts healthcare system over the past decade, including a 25 percent reduction in hospital capacity and a 20 percent decline in the average length of a hospital stay, which have helped moderate healthcare spending.

If this is the case, why does our per capita healthcare spending look high? First, we live in a high-cost region of the country. As a result of the higher cost of housing, child care, and other basic needs, we pay healthcare workers 15 to 20 percent more than the national average. Our operating costs are driven by the same cost-of-living factors that drive up costs for all businesses in Massachusetts.

Second, Massachusetts hospitals receive nearly five times the national average in research grants from the National Institutes of Health. These are costs that are paid for by the federal government -- not by Massachusetts citizens -- but because they are reflected in hospitals' bottom lines, they count toward per capita healthcare spending.

This research is a major asset and stimulus to our economy. We could cut our costs substantially by refusing all research grants, but that does not make economic sense.

Third, Massachusetts attracts more out-of-state patients per capita and receives three times the national average in Medicare graduate medical education payments than the national per capita average.

Again, these are costs that are not borne by Massachusetts residents. In the name of reducing per capita healthcare spending, do we really want to turn away the revenues of out-of-state patients or deny medical students from around the world the opportunity to receive their clinical training here?

What is the point of this detailed dissection of numbers? It separates real problems from illusory ones. The real problem is one of rising healthcare costs throughout our nation, which those of us in healthcare must work to address. These costs are driven primarily by all of the new drugs, procedures, and treatments which bring great benefits to us all -- but at great cost.

There are a number of things providers can do to improve the efficiency and effectiveness of our healthcare system. They include:

Implementing electronic medical records that allow physicians throughout the healthcare system to access patients' medical records, make fully informed decisions about their care, and avoid unnecessary tests and procedures.

Installing computerized order entry systems to reduce costly drug errors and steer doctors toward appropriate lower-cost drugs and imaging procedures.

Participating in pay-for-performance programs in which providers are at financial risk if they do not meet certain quality and efficiency standards.

Implementing disease management programs that provide better follow-up care for the 5 percent of patients who represent 50 percent of healthcare spending.

Making the entire healthcare system more ''transparent" by providing better cost and quality data to consumers and purchasers of healthcare.

Healthcare is as important to Massachusetts as automobiles are to Michigan. Let's recognize healthcare as an asset -- not a liability -- as we work ever harder to increase its value.

Dr. James J. Mongan is president and CEO of Partners HealthCare.