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Determination of need rule only goes partway

I usually spend some time throughout the year visiting with accounts, physicians, hospitals, and brokers (among others), just to hear what’s up and what’s going on.  Earlier this week, I was out visiting the leadership at a community hospital in Massachusetts, and asked them if they appreciated the MA Department of Public Health’s (DPH) decision to require academic medical centers to prove they weren’t duplicating existing clinical services in the community when they opened new operations in the suburbs around Boston.

For the uninitiated, this issue has been percolating in Massachusetts for the past couple of years, as a number of well known teaching hospitals have broken ground on some pretty big outpatient facilities in the suburbs around Boston. The service suite in these places varies, but it’s basically day surgery, cancer treatment, cardiac care, high-end radiology, and assorted other high-margin outpatient services that many community hospitals in Massachusetts argue they were already doing, and may now lose to these new facilities.

The community hospitals also argue – and there’s plenty of data to
back them up on this – that they already deliver most of these
services, do it for a lot less than the teaching hospitals – and will
lose business to these new sites once they open.  This will, in turn,
jeopardize their ability to deliver the whole suite of inpatient and
outpatient services they’ve been delivering successfully in these
communities for years – which will raise the overall cost of health
care.

In response to these concerns, the state’s DPH recommended, and the
Public Health Council voted affirmatively for, changes in the state’s
Determination of Need (DON) rules that would require a provider to
demonstrate they weren’t duplicating existing services if they expanded
their footprint into someone else’s territory.

Or so I thought.

When I asked these community hospital leaders about this reform, they scoffed at me. "It only applies to the conversion of existing outpatient services to inpatient services," they said.

They added that the new rule won’t require any kind of approval if a teaching hospital wants to open a new outpatient facility that duplicates existing community-based services anywhere in Massachusetts. My initial reaction to this was, “that can’t be right – the whole ballgame is in expanding outpatient and day services.” 

So imagine my surprise when I called a few health care lawyers I know and asked them about whether or not the new rules around service duplication applied to outpatient services.  The answer — while delivered with three layers of lawyerspeak — was, for the most part, "no."

Ouch. If this is, in fact, the case, then this reform does very little to stop the ongoing expansion of clinical services out of downtown Boston and into the suburbs.  That’s too bad.

There’s a lot of really good — and relatively inexpensive — care being delivered outside the city of Boston by respected caregivers in community hospital settings.  Before provider organizations from other parts of the state can open up new — and potentially unnecessary — outpatient services in these service areas, the state has an obligation to determine if, in fact, the new services are necessary and/or cost-effective.

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So much for controlling your medical cost trend in MA.