State Meets Cost Growth Benchmark

The state’s Center for Health Information & Analysis (CHIA) last Tuesday released its annual report on the performance of the Massachusetts healthcare system, concluding that total healthcare expenditures (THCE) per capita from 2017-2018 matched the state’s cost growth benchmark of 3.1%. Massachusetts has consistently fallen below national per capita growth and the state has not exceeded its spending target since 2015.
As the entire system continued to move in the right direction, there were some expenditure outliers. The growth in prescription drug spending was 5.8%, accounting for the majority of the state spending growth. Hospital outpatient spending growth moderated from 5.1% in the prior year, but at 3.8% was still above the benchmark. Inpatient spending growth was 3.7%. Why hospital costs in the most recent report are higher than expected could be due to a variety of factors, including those beyond the control of hospitals, such as pharmaceutical and labor costs, an aging workforce, physician recruitment, and new technology. In addition, an increasing proportion of Massachusetts residents are aged 65 and over, and policy-driven efforts to move lower-acuity and less medically complex patients to outpatient settings continue to increase.
As in past years, CHIA’s report is preliminary and subject to change.