NCPA - National Center for Policy Analysis


May 19, 2009

Efforts by Massachusetts General Hospital to reduce health spending could be indicative of the difficulty the health industry faces in trying to reduce spending growth, according to the Boston Globe.

Industry groups last week pledged to seek a 1.5 percent overall reduction in health care spending over the next 10 years.  Massachusetts General's program, which began in 2006, aims to reduce hospitalizations among the elderly by 15 percent to 20 percent, as well as to improve the quality of care the elderly receive.  A study looking at 35 efforts to improve elderly care found that only six, including Massachusetts General's program, saved money or covered their costs, according to the Globe. 

Massachusetts General's program relies on nurses in primary care practices to be in regular contact with patients and provide assistance with nonmedical services.  The program also uses electronic health records to coordinate care: 

  • The hospital spent $8 million to $9 million over the first three years of the program to provide enhanced services to patients.
  • Hospital readmissions fell by 19 percent, admissions decreased by 17 percent and emergency department visits dropped by 15 percent between 2007 and 2008, according to preliminary research.
  • The program saved enough by reducing hospital admissions and ED visits to cover its costs and also to generate savings of $7 million to $10 million.
  • The overall cost for the program was about 5 percent less than for a group of other patients treated in a more traditional way.

According to David Cutler, a health care economist at Harvard University, improving care and reducing costs among the elderly is a necessary component of health reform.  If we can't do this, he says, it doesn't bode well for health reform.

Eric Weil, a primary care physician and medical director of the program at Massachusetts General, says Medicare is looking for any and every way to save money. "This is a population of patients who are sick and will get sicker over time.  Any opportunity to demonstrate savings in this group of patients is good, and 5 percent is very good," he says.

Source: Liz Kowalczyk, "Hospital Strains to Cut Elder Care Costs; Mass. General's Effort Reflects a National Challenge," Boston Globe, May 17, 2009.

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