Take a walk down practically any major thoroughfare in the city of Boston, and you’ll be hard pressed to go more than a few blocks without running into a hospital. The cities of Cambridge and Boston have nine hospitals and medical centers between them, and a whopping two dozen hospitals are packed into the greater Boston metropolitan area.
Knowing that state-of-the-art medical help is always close at hand is probably a comforting feeling. But it shouldn’t be. The presence of so many hospitals in Boston — along with high numbers of physicians, particularly specialists — contributes to the enormous amount of unnecessary medical care that gets delivered in the state. Unless Massachusetts finds a way to limit growth in the supply of both hospitals and specialists, the state’s efforts to control health care spending are likely to be thwarted.
How can more hospital beds and more doctors lead to worse care and higher spending? Basic economics would suggest that more hospitals competing with one another would lead to lower costs, but that’s not the case in health care. Competition among hospitals in Boston has provoked a medical arms race for the newest gadgets and most cutting-edge treatments that has helped drive prices up, not down. The prestige of the city’s hospitals is known worldwide, and over the last decade two of the city’s largest and most reputable hospitals negotiated extremely favorable rates with Blue Cross Blue Shield and other private insurers.
Of course, how much money gets spent on health care isn’t just a matter of prices. It’s also a function of the volume of services delivered. If Bostonians undergo more CT scans, then Medicare, the state, and employers have to spend more on health care. Ditto when Bostonians see more doctors in a year, and spend more days in the hospital. It turns out, health care prices aren’t the only thing that are high in Boston. So is the sheer amount of care patients receive when compared with many other cities.
My colleagues at the Dartmouth Atlas Project have used Medicare claims data to look at spending patterns around the country, and the variation is striking. In Seattle, for example, a city with comparable demographics to Boston’s and its own state-of-the-art medical centers, Medicare spent was about $7,000 per beneficiary per year between 2003 and 2007. In Boston, Medicare’s bill per beneficiary was $2,000 higher. Most of that gap was due to differences in the way medicine is practiced in the two cities.
That’s where the high number of physicians and hospitals in Boston comes into the picture. We like to think that doctors make decisions about our care — for example, whether we should be hospitalized, get a CT scan, or go to an intensive care unit — based on sound science and good judgment.
In reality, there isn’t much good science to guide our doctors around many such decisions. Even when evidence exists, physicians often decide how to treat us based in part on the supply of medical resources in their hospitals. The more CT scanners available, the more likely it is there will be a CT scan on the hospital bill. The more ICU beds, the more likely we are to land in one.
This is especially troubling when it comes to patients who are in the last few months of life. According to the Dartmouth Atlas, Bostonians spend 50 percent more days in the hospital in their last two years of life compared with Seattleites, are 55 percent more likely to die in the hospital, and have 30 percent more physician visits — in part because Boston has 50 percent more hospital beds per capita and 27 percent more physicians.
And here’s the kicker: it’s far from clear that all that extra care is leading to better health. The quality of care isn’t demonstrably better in Boston than in Seattle — in fact, it’s often worse. Patients in Boston aren’t necessarily more likely to get tests and treatments they need. At the same time, getting treatments and tests they don’t need, and being hospitalized unnecessarily, exposes them to the risk of medical error, infection, and other kinds of harm.
All of which suggests that the state of Massachusetts, private payers, and Medicare are wasting billions of dollars each year on unnecessary medical services. That money is going towards care that patients don’t need, and might not want if they understood how little it does for their health and how much it costs them.
Massachusetts could bring health care spending down by controlling prices, but that would still leave patients vulnerable to undergoing care that is wasteful and potentially harmful. A better path to reining in spending is to put the brakes on the medical arms race that Massachusetts hospitals are now engaged in, buying expensive new (and largely unproven) technology such as proton beam accelerators to treat cancer, new imaging machines, and surgical robots. Governor Deval Patrick should also use his executive power to put a halt to hospital expansion plans. Even with an aging population and greater access for citizens who were once uninsured, Boston has all the hospital capacity it needs, and more than enough specialists.