State Healthcare Costs Continue to Beat Benchmark ...

The Health Policy Commission (HPC) released its annual cost trends report last week, reiterating what the state reported last September – that total healthcare expenditures in Massachusetts grew by 2.8% in 2016, well below both the 3.6% growth benchmark the commonwealth had set and the national 3.5% growth rate.  2016 marked the seventh consecutive year that the commonwealth’s total healthcare spending growth was below the U.S. rate.

The highest percentage of total expenditures in the state was for physicians and other professions (26.8%); that sector saw spending growth of 3.1%.  The next largest component is hospital inpatient (21.1%), which experienced cost growth of just 2.2% in 2016.

The sector of the healthcare system with the largest cost growth was once again pharmaceuticals; pharmacy cost growth was 6.1% in 2016. The other part of the system that exceeded the benchmark was hospital outpatient costs, which grew 5.5%.

In its analysis of hospital outpatient costs, the HPC noted, “Growth in hospital outpatient spending does not by itself indicate that spending is unwarranted; for example, shifting higher-cost inpatient care to outpatient care could represent an improvement in efficiency.”  HPC noted that many surgical procedures that are minimally invasive and that employ better anesthesia have shifted from inpatient to outpatient settings, driving down more expensive inpatient costs while increasing outpatient volume.