MGH’s growth comes at expense of affordable health care

Meanwhile Boston’s two largest and most prestigious hospitals, MGH and its partner, Brigham and Women’s, have been on a binge to acquire community hospitals and to create freestanding surgical centers and other facilities, as well as acquiring doctor practices to maximize referrals. The big rival system, Beth Israel Lahey Health, has been pursuing a similar strategy.
If you have been on Cambridge Street at the foot of Beacon Hill lately, you have seen two massive towers under construction. This $1.9 billion project will increase the footprint of Massachusetts General Hospital, housing 482 new beds and approximately 977 underground parking spaces. Because of consolidation of older facilities, the net number of new beds is approximately 94.
Why do health care costs keep increasing? One reason is the deliberate expansion of large health care systems, which maximizes their market power to increase bills to private insurers, Medicare, the Commonwealth, and patients.
The more market share that the health care network Mass General Brigham has, the more unthinkable it is for an insurance company to tell its subscribers it can’t use the MGB network. That, in turn, gives MGB immense leverage in the bargaining with insurers over rates. The MGB takeover of less costly community hospitals also allows Mass General and Brigham, as Harvard teaching hospitals, to increase bills to teaching-hospital rates.
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The strategy works. The combined operating revenue of Mass General Brigham has steadily increased to $20.6 billion in fiscal 2024, up from $16.7 billion in fiscal 2022.
When it comes to research and innovation, MGH is one of Boston’s crown jewels. If you have a complex medical condition, requiring a state-of-the-art procedure by the finest specialists, MGH is where you want to be. But that doesn’t mean the continued expansion of MGH and the Brigham into primary care and routine surgical and medical procedures is smart policy.
In principle, the Commonwealth has the authority to challenge these expansions. In practice, that authority is fragmented, and state officials tend to be gun-shy about challenging the plans of MGB, the state’s largest employer. The MGH board of trustees, chaired by Jonathan Kraft, also president of the Kraft Group, reads like a who’s who of Boston’s permanent government. In December, automobile dealer Herb Chambers donated $100 million for the cancer center at the new complex, and one of the new towers will be named for him.
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In theory, four state and local agencies have some say over these continued expansions. The attorney general could challenge them on antitrust grounds. But there has never been a Massachusetts antitrust suit against hospital market concentration and pricing power.
The Commonwealth also requires proposed new health facilities to apply for determination-of-need approval from the state Department of Public Health. This form of regulation was intended to prevent duplicative facilities that would cannibalize each other and raise overhead costs. It was once robust. But determination-of-need approval has become pro forma, especially in the case of a politically powerful institution like MGB.
There is a similar pattern with the Massachusetts Health Policy Commission. The HPC doesn’t have the power to veto expansion plans or order rate cuts. But it can and does conduct audits. On one recent occasion, the HPC gingerly flexed its muscles and negotiated modest rollbacks in MGB rates that exceeded state guidelines.
The city of Boston, through its planning and zoning agencies, also needs to approve or deny these expansion plans. MGH began planning these new towers and acquiring the land at least a decade ago. It announced detailed plans to its staff in January 2019, complete with artists’ renderings.
But only in 2021 did the hospital seek the necessary formal approval from the Boston Planning and Development Agency and the Boston Zoning Commission, which it got with very minor tweaks. Approval was a foregone conclusion.
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In November 2021, Maura Healey, then state attorney general, issued a report warning that MGB’s planned creation of three new surgery centers in Westborough, Westwood, and Woburn would increase market share “at the expense of lower-priced providers.” She did not explicitly threaten action, but MGB is sensitive to bad publicity and scrapped the plans in 2022.
This action by Healey was exceptional because it was very much the exception to a pattern of official acquiescence. Since becoming governor, Healey has had little appetite for wading into these issues. Even in the grotesque case of Steward Health Care, the Commonwealth was very slow to engage.
Does Massachusetts really have a shortage of hospital beds? Yes and no. What it has are too few beds in the right places.
Several hundred admitted patients are backed up in makeshift spaces in hallways of hospital emergency departments in Greater Boston. However this is not the result of a shortage of hospital beds, nor of COVID-19, which now accounts for very few hospitalizations.
The bottleneck occurs because some 1,600 patients are taking up acute care beds in Boston area hospitals, awaiting discharge to rehabs or home health care, according to the Massachusetts Health & Hospital Association. But there are not enough rehab beds, so these patients stay in hospitals, preventing the admission of other patients needing acute care.
Rehabs have been closing or cutting space despite the demand because the health system doesn’t pay them and their staffs enough money to stay open and fully staffed.
In other words, the system spends too much money on the most costly parts and not enough money on the most cost-effective parts. There is no easy way of deciding that Mass General should get less, so that rehabs and home care can get more, because there is no central health planning agency, no policy coordination, and no single spigot of money.
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If the Commonwealth as a payer were paying less to MGB, then some public dollars might be freed up for more cost-effective uses. But most income for large hospitals comes from Medicare, private insurers, and patient out-of-pocket payments, not from the state.
Even so, more leadership and coordination by the governor and attorney general could help. Acting to limit the consolidation and expansion of the most costly parts of the system would be a good start. The outstanding record of Mass General in medical research and state-of-the-art treatment does not require the hospital to increase its scale or to dominate primary and routine care.
Robert Kuttner is coeditor of The American Prospect. He teaches at Brandeis University Heller School and is former national policy correspondent for the New England Journal of Medicine.