Increased Consolidation Post Reform Transformed Massachusetts Health System, Finds PwC's Health Research Institute

Changed landscape fosters innovative alliances in Massachusetts,

ER visits decline, health status improves

NEW YORK, May 30, 2013 – PwC’s Health Research Institute (HRI) today released the second installment of The Massachusetts Experience, a multi-media project examining the effects of insurance coverage expansion on the state’s health system after the law passed seven years ago.  As the nation prepares for implementation of major provisions of the Affordable Care Act, HRI’s analysis of the health reform experience in Massachusetts sheds light on the potential implications for the rest of the nation's health sector.

Major regulatory changes continue to drive industry consolidation.  Nearly one-third of the 70 acute care hospitals in Massachusetts have been involved either in a merger, acquisition or partnership since 2007, and another 20 percent are in various stages of discussion.  By contrast, only about 9 percent of Massachusetts hospitals are entirely independent, raising doubts about the long-term viability of stand-alone community hospitals in the U.S.

“The rapid pace of activity in Massachusetts reflects broader consolidation trends across the country,” said Robert Valletta, PwC U.S. healthcare provider leader, based in Boston.  “Innovative partnerships can lead to new payment models that reward coordinated, team-based care as opposed to volume of procedures.  Our analysis suggests the lessons learned in Massachusetts can offer insights to health industry executives across the nation as they prepare to adapt to the new landscape.”

Health plans may encounter financial instability after major regulatory changes are enacted, the data suggests.  While the new enrollment in Massachusetts led to higher combined revenues across the state’s largest health plans, profits varied widely in the years following enactment of the law, HRI found.

Providers in Massachusetts have experienced more subtle financial effects: profit margins leveled out.  Between 2005 and 2010, academic medical centers saw a 1.4 percent margin increase while other hospital types saw increases below 1 percent over the same period.  Hospitals in the state have experienced a decline in the use of emergency departments as consumers access primary care in lower-cost settings.  Today, the state is seeing signs of improved health among residents, positive changes in patient behavior, but also persistently high costs which the state is taking action to rein in and continues to address.

The latest report follows on HRI's analysis of the rise in employer-sponsored insurance in Massachusetts and an interactive graphic detailing the financial implications of the federal tax exclusion for work-based benefits. To explore the graphic and see video excerpts of HRI's discussion with Massachusetts health industry executives, visit www.pwc.com/us/massachusettshealthreform.
 

About PwC’s Health Research Institute (HRI)

PwC’s Health Research Institute provides new intelligence, perspectives and analysis on trends affecting health-related industries. HRI helps executive decision makers navigate change through primary research and collaborative exchange. Our views are shaped by a network of professionals with executive and day-to-day experience in the health industry. HRI research is not sponsored by businesses, government, or other institutions. For more information, visit www.pwc.com/hri.
 

About PwC’s Health Industries Group
PwC’s Health Industries Group is a leading advisor to public and private organizations across the health industries, including healthcare providers, pharmaceuticals, health and life sciences, payers, employers, academic institutions and non-health organizations with significant presence in the health market. For more information, follow PwC Health Industries at @PwCHealth or visit www.pwc.com/us/healthindustries.
 

About PwC US

PwC US helps organizations and individuals create the value they’re looking for. We’re a member of the PwC network of firms in 158 countries with more than 180,000 people. We’re committed to delivering quality in assurance, tax and advisory services. Tell us what matters to you and find out more by visiting us at www.pwc.com/US.
 

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© 2013 PricewaterhouseCoopers LLP, a Delaware limited liability partnership. All rights reserved. PwC refers to the US member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details.
 

This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.
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Lisa Stearns
The Hubbell Group, Inc.
lstearns@hubbellgroup.com
(781) 878-8882