Forthcoming bill would address healthcare consolidation, bolster community hospitals
Sam Doran/State House News Service
House Speaker Ronald Mariano
Hospital systems seeking to expand would face another layer of state review and a buffer zone would be created to protect community hospitals against competition from new outpatient surgery centers, under a bill House Speaker Ronald Mariano hopes to move forward in the next two weeks.
Mariano said the forthcoming bill responds to an issue he sees as the result of market changes that took place after the 2012 passage of a health care cost control law. Among other features, that law created the Health Policy Commission and tasked the new agency with analyzing mergers, affiliations and acquisitions to determine if they will have an impact on health care costs or market functions.
"At the time, there were a lot of hospitals combining and a lot of mergers going on, and there seems to have been a change in health care as we moved through 2012 to the present, and now we're dealing with expansion, and expansion into the catchment areas of community hospitals, in a quest for some of the bigger hospitals to find more private-payer patients," Mariano told the News Service.
The Department of Public Health vets proposed health care facility expansions, changes in ownership and certain other transactions through its "determination of need" (DON) process and program.
Mariano, a Quincy Democrat, has been indicating recently that the House plans to act on some sort of health care legislation. On Monday, he said the bill he has in mind would "close the DON loophole that's being exploited now, especially around market conduct studies," referring to the Health Policy Comission's cost and market impact reviews.
In a phone interview late Thursday, the speaker sketched out more details of the bill, which he said is still being worked on in the Health Care Financing Committee.
Under the bill, hospital systems pursuing expansions that require a new license -- not expansions on existing campuses -- would need to submit a material change notice to the HPC in addition to going through the DON process.
When the HPC receives a notice of material change -- currently required for hospital system mergers and acquisitions -- it analyzes the transaction to gauge its likely impact, and can conduct a more comprehensive Cost and Market Impact Review on those it believes will have significant effects.
Mariano said that were the HPC to engage in a review of an expansion under the bill, its final report would need to be considered as part of the determination of need decision-making. He said the DON review is "not as rigorous and not as extensive as the HPC process."
"The hope would be that we'd have a better understanding of what it's going to do with pricing in the marketplace," Mariano said. "My sense is that as you move into a community hospital's catchment area with a big name, you're going to siphon off a lot of the [patients insured by] private payers, and that leaves the community hospital, as we all know, with the public payers, which is considerably less than the rates insurance companies are paying."
As far as a timeline for action on the bill, Mariano said, "My hope is that we at least get it out before we leave, and then we'll get it done."
The Legislature is set to embark on a roughly seven-week recess from formal lawmaking sessions after Nov. 17. Other top policymakers have also voiced interest in tackling some sort of health care legislation -- Senate President Karen Spilka has said she wants to do a mental health bill, and Gov. Charlie Baker has said he plans to file a reform bill, likely in in January -- but there appears to be a lack of common ground on particular policies, and no clear timetable for considering bills.
A key player in past health care legislation on Beacon Hill, Mariano named the survival of community hospitals as one of his priorities when he ascended to the speakership last year. Asked why he hopes to advance a bill in the remaining days before the next recess, Mariano described the importance of such institutions to their regions.
"I lost the community hospital in Quincy," he said, referring to Quincy Medical Center's closing in 2015. "Preserving community hospitals has really been a priority for me. They're the largest employer in the communities usually, the economic engine in the community. It really does devastate a city or town that hosts a community hospital, plus they provide low-cost alternative, quality care in a marketplace that needs that."
Mariano said the review issue was brought to his attention by the "by the Mass General Brigham expansion," but that the bill was not targeted at that particular proposal.
Mass General Brigham, the state's largest health care system, in December 2019 announced plans for a $400 million expansion involving four outpatient centers in eastern Massachusetts and southern New Hampshire -- an expansion of its Westwood facility and the creation of new centers in Woburn, Westborough, and Salem, N.H.
In February 2021, Mass General Brigham filed a determination of need application for three ambulatory sites in Woburn, Westborough and Westwood, which remains pending.
The application says that offering ambulatory surgery, physician services and imaging in one location at each of the three sites "will foster greater care coordination, improve the overall quality of the Clinical Services and promote better health outcomes for the Applicant's patients." The project is opposed by a collection of business, health and community organizations calling itself the Coalition to Protect Community Care, which argues the expansion would hurt the financial viability of local providers.
"I don't know what's going to happen with the Mass General Brigham process," Mariano said. "I'm looking at a lot of the hospitals behind this one that are going to come in to try to replicate the same process to get their expansion done through the DON process."
In a Boston Globe op-ed on Friday, Mariano said the legislation that's in the works could also bring "potential intervention by the attorney general" on health care projects and said the bill "seeks to protect community hospitals from encroachment by establishing a buffer zone against new outpatient surgery centers to prevent these facilities from poaching patients."
"These reforms, in addition to increased state financial support, would help ensure the survival of community hospitals," Mariano wrote, saying that "true structural relief for community hospitals" will need to span multiple pieces of legislation.
In particular, Mariano in his op-ed cited financial pressures facing Lawrence General Hospital and Holyoke Medical Center and portrayed health care facilities as mere pieces in a much larger struggle over prices and market share between large insurers and health care providers.
"Insurance companies, like the newly formed Point32Health (formerly Harvard Pilgrim Health Care and Tufts Health Plan), have rushed to merge in order to counter ever-expanding hospital systems that charge escalating rates, like Mass General Brigham and Beth Israel Lahey Health, which together provide 41 percent of all hospital-based care in Massachusetts," he wrote. "The trend of consolidation that has defined the current market is nothing short of an arms race."
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