Mass. Hospitals in Financial Crisis amid Rising Healthcare Costs
TL/DR –
The health care sector in Massachusetts is dealing with rising costs that are making care unaffordable for many residents, according to a report by the Center for Health Information and Analysis. The report found that total health care spending was at $71.7 billion in 2022, exceeding the state’s 3.1% benchmark for health care cost growth. Despite the increase in spending, hospitals in the state are seeing a decrease in profitability, with acute hospital profitability declining by 9.2 percentage points from 2021 to 2022.
Massachusetts Healthcare Sector Faces Dual Problem of Rising Costs and Declining Hospital Profits
Massachusetts’ healthcare sector is grappling with a twin predicament – spiking costs and declining hospital profitability. A new report from the Center for Health Information and Analysis (CHIA) sheds light on this issue, detailing the rising costs making healthcare unaffordable for many residents and the falling profit margins across the state’s hospitals.
Healthcare Industry Navigates Another Capacity Crunch
Another capacity crunch is looming for the healthcare industry as it finds itself short-staffed and dealing with a patient backlog. This exacerbates the financial woes of healthcare providers such as Steward Health Care and threatens access to care for hundreds of thousands of Massachusetts residents.
Massachusetts Health Care Spending Skyrockets
According to CHIA’s annual report, total health care spending in Massachusetts increased by $3.9 billion in 2022, a 5.8% increase per capita from 2021’s level. This exceeds the state’s 3.1% benchmark for healthcare cost growth. The largest contributors to this expense were pharmacy spending and non-claims payments.
Hospitals’ Profitability Takes a Hit
The report also highlighted that the overall acute hospital profitability had a negative margin, showing a decrease by 9.2 percentage points from 2021 to 2022. Despite a 5.5% increase in total operating revenue, hospitals couldn’t keep up with the 8.9% increase in total operating expenses.
Healthcare Affordability Remains a Known Issue in Massachusetts
Despite its strides in health care reform, Massachusetts residents still face affordability challenges due to rising healthcare costs and increasing enrollment in high deductible health plans. The popularity of these high deductible plans has raised concerns about their affordability and impact on members’ access to care.
Massachusetts Policymakers to Discuss Health Care Matters
Policymakers shaping the state’s health care decisions are due to gather to discuss potential modifications of the health care cost growth benchmark for 2025. However, there have been disagreements among the lawmakers regarding the improvement of the Health Policy Commission’s (HPC) regulatory powers and the expansion of oversight in hospital expansions into territories covered by community hospitals.
Health Insurance Premiums Rose by 5.8% in Massachusetts in 2022
Health insurance premiums, a significant healthcare expense, rose by 5.8% from 2021 to 2022, averaging at $595 per member per month. Notably, 41% of Massachusetts residents reported experiencing healthcare affordability issues over the last 12 months, especially among Hispanic and Black residents.
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