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Fact Sheet Re: Boston Children’s Hospital (BCH) DoN Application #4-3C47

Written by Anne Gamble Ten Taxpayer Group/Friends of Prouty Garden

This list of important facts regarding the Boston Children's Hospital DofN Application was prepared by the Anne Gamble Ten Taxpayer group and The Friends of Prouty Garden.

 

  • MA health care costs increased last year at 6.5 times the rate of inflation, over twice the inflation multiple of the prior year;1
  • BCH’s FY15 operating costs in its first six months increased by 10%2 - well above the state’s 3.6% target limit for statewide health care cost increases. They are already the highest-priced pediatric provider in MA and this will cause them to further increase charges even without their proposed expansion;
  • BCH has attributed this substantial cost increase, and the resulting negative impact on its operating margin, to an increase in out-of-state patient utilization;3
  • BCH’s DoN Application proposes to expand services for these same out-of-state patient populations;
  • Despite this fiscal evidence to the contrary - and despite countervailing industry utilization and payment trends, both domestically and internationally - BCH insists it will be able to achieve much higher revenues for these out-of-state patients should its proposed expansion Project be approved;4
  • BCH’s total reliance on future out-of-state and international demand for its proposed increase in ICU capacity, and on aggressive increases in patient revenues from these patients, is entirely speculative and without meaningful quantitative analysis or support in its Application or the Independent Cost Analysis (ICA) submitted on its behalf;
  • BCH has a history of incorrectly predicting its future patient utilization (see its 2010 DoN projections of continued growth vs. actual substantial utilization declines since 2010);
  • BCH’s DoN Application proposes to expand its existing inpatient ICU bed capacity by over 50% despite there being no MA need for this expansion;
  • Because there is no MA need for these additional ICU beds, their approval would cause a duplication of exiting health care resources that are the most expensive in the Commonwealth;
  • Because they are the most expensive beds in the state, this duplication of expensive hospital resources would adversely impact the Commonwealth’s ability to meet its cost containment goals (as BCH’s operating cost increases already negatively impacted this goal in FY15);
  • The ICA failed to even consider the added commercial and state spending for outpatients of BCH’s proposed $200M-plus investment for its proposed ambulatory facilities and renovations. Its conclusion that the Project would have no impact on MA health care spending is therefore incomplete and devoid of merit;
  • The ICA also failed to test BCH’s utilization, operating and financial assumptions to calculate a “safety margin”, or break-even point, should BCH’s assumptions again prove erroneous;
  • Should BCH again be overestimating its future utilization and payment levels from non-MA patients, there is no way to insulate MA payers from the spending increases BCH would need to obtain from Medicaid, MA payers, employers, patients and their families;
  • Since these cost increases would, by BCH’s own admission and that of its ICA consultant, have little or no benefit for MA children, these increased costs would be unwarranted for MA payers and consumers.
  • For all these reasons and more, BCH’s proposed expansion Project should be dismissed or denied in favor of a less aggressive, and more sustainable, modernization project without the proposed expansion in unneeded ICU beds and with greater benefit for MA residents, including Medicaid MCO children for whom BCH has discouraged access to its services with unaffordable pricing demands.

1 September 8, 2016 The Boston Globe, A slower rise in health spending
2 June 16, 2016 Boston Business Journal, Children’s Hospital’s costs mount ahead of $1.1B expansion project
3 Ibid.
4 See Independent Cost Analysis and Anne Gamble Ten Taxpayer Group response to it.

Read 2236 times Last modified on Monday, 23 January 2017 11:25

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