Boston Medical Center gets screwed by the Massachusetts government

Boston Medical Center has provided care to the underserved and Medicaid population in Boston for almost 150 years. And what’s happening to the venerable institution is gut-wrenching to read.

I trained at Boston Medical Center (BMC), completing my internal medicine residency there in 2002.  A recent write-up in Boston Magazine highlights the financial trouble the hospital is going through:

Boston Medical Center is almost broke, perilously close to what its accountants euphemistically refer to as the “zone of insolvency.” It did not get here — $175 million in the red for the fiscal year ending September 30 — because it bought too many MRI machines or banked on cosmetic surgery being a big income generator. It landed in this hole because the folks on Beacon Hill like the sound of universal healthcare a whole lot more than they like the cost of it.

The piece is a powerful indictment against the Massachusetts government.  And completely on the money.

I wrote previously in a CNN.com op-ed that expanding coverage without considering costs is a recipe for disaster.  It’s true that Massachusetts has the highest rate of insured patients in the country.  It makes for good headlines for the governing party. But doing so without addressing costs was a grave mistake:

Massachusetts is finding out just how difficult it is to fiscally maintain universal coverage. In part due to soaring health costs, the state Legislature has proposed reducing health benefits for 30,000 legal immigrants and cutting funding to inner-city hospitals like Boston Medical Center, which, according to the Boston Globe, may “force it to slash programs and jeopardize care for thousands of poverty-stricken families.”

Those dependent on the care supported by Government reimbursement — the Medicare and Medicaid demographic, namely –  are going to be penalized as health reform takes hold. Consider BMC’s admirable mission to serving the poor:

To preserve Boston City Hospital’s long-standing mission to serve the poor, lawmakers wrote that obligation into legislation that created the new quasi-public hospital. Boston Medical Center, the statute stipulates, must “consistently provide excellent and accessible health care services to all in need of care, regardless of status or ability to pay.” The state, in turn, must compensate BMC for treating a disproportionate share of low-income patients by paying “rates that equal the financial requirements of providing care to recipients of medical assistance.”

BMC has kept its part of the bargain. Seventy percent of its patients are poor, elderly, disabled, or members of ethnic and racial minorities. More than 50 percent rely on free care, Medicaid, or state-subsidized insurance plans like Commonwealth Care. Many live in Boston’s most impoverished neighborhoods, and more than 30 percent speak a primary language other than English.

Massachusetts politicians are under heavy pressure to cut the state’s budget, and Medicaid costs are among the most inviting targets.  And this places the hospital in an impossible situation.  Yes, they can stop taking Medicaid patients.  But first, where else would these patients go?  The area’s high profile hospitals seen recently on ABC’s reality television show Boston Med, like Brigham and Women’s?  Unlikely.  And second, the state requires BMC to accept all comers.

A no-win situation, indeed.

Health reformers like to say that, in response to decreasing hospital payments, medical institutions need to “cut costs,” and “curb waste.”

But, as the article noted, “Demanding that BMC simply cut its way to solvency is as glib as promising that every government budget can be balanced by eliminating ‘waste, fraud, and abuse.’ Of course programs should be reviewed for inefficiencies, but there is no getting around reality: It is more expensive to treat the patients who come to BMC.”

Boston Medical Center is where I got my start out of medical school, and has played a defining role in making me the doctor I am today.  Its impending financial insolvency is heartbreaking, and is a situation that will echo across the country as Massachusetts-style reforms take hold nationally.

Universal coverage makes great headlines, helps get politicians elected, and, to be fair, is something that needed happen.  But doing so without adequately addressing its cost is going to bankrupt hospitals, especially inner-city ones like BMC.  That will hurt the Medicaid and Medicare patients dependent on them.

And that’s a goddamn shame.

 is an internal medicine physician and on the Board of Contributors at USA Today.  He is founder and editor of KevinMD.com, also on FacebookTwitterGoogle+, and LinkedIn.

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  • DKBerry

    Until reform advocates and HCOs address how to best and most efficiently deliver health care services we will continue to fail. Being both ineffective and inefficient is a prescription for extinction.

    As Dr. Pho said… it’s not as simple as just cutting “fraud, waste, and abuse” as if that were a budget line item in order to make ends meet. HCOs must invest in different constructs which deliver an improved health services outcome and maintain the wellness posture using other than the current parochial stovepipe solutions founded in special interest politics. Throwing money down the BMC “black hole” simply keeps on life support a failed delivery system that fails the public in what it delivers and fails the public in what it costs.

    Everyone in business knows there are no general factories that make or deliver a full gamut of products or services. Why is it that leaders in the health care sector … along with elected officials are so blind to the fact that general hospitals are a poor option for delivery of effective and efficient health care services?

    The American Hospital Association’s decades long protectionist lobbying that have fought against improved constructs is at the center of America’s health care crisis.

    • http://glasshospital.com GlassHospital

      I trained at Cambridge Hospital in the 90s, kindred spirits to BMC-pride in caring for the underserved and uninsured.

      We used to boast that 75% of uninsured Cantabridgians had a PCP to call their own and through MassHealth (Free Care) could get the meds they needed. It was an ideal environment to train in.

      I’m puzzled by DK Berry’s comment though. Are you in fact arguing that specialty hospitals are the way to go forward, that they’re much more effiecient and targeted and therefore more cost-effective?

      Because I’d like to see proof of that principle.

      No one expects factories to be generalized. But hospitals are not factories. Without general hospitals to help triage patients into specialty realms, how can we discern who needs to go where?

      Further, the magazine article and Kevin’s post are not making the claim that being a general hospital is to blame. It’s the sheer burden of no and low reimbursement for populations at the margin that make the business model impossible to sustain.

      • jp

        Totally agree w/GlassHospital. Factories are not analagous to hospitals.

  • SarahW

    Restore a little sanity by making cost transparent, and make a difference in the patient’s pocketbook

    • jp

      To what pocketbook are you referring? I am a GP with extensive exp treating medicaid, elderly and disabled (most of them uninsured) patients, and I assure you, most of these folks are barely hanging on. They often depend on the kindness of friends, family and community for the most basic needs- food, bed and transportation. They have so few resources ($) that for them, discussions of cost savings, consumer choice, etc. are meaningless.

  • emt.dan

    I work in the walls of the BMC and see on a daily basis the extraordinary work that is done for the city’s impoverished. It is truly criminal what the state is doing, and unacceptable.

  • http://www.conisus.com Richard Leff

    Health care reform in Massachusetts is not really the problem. Funding and operation of inner city “charity” hospitals is an issue all over the country. Grady Memorial Hospital in Atlanta, untouched by health care reform, had to be saved from the brink of insolvency over the past few years. A public-private partnership that facilitated private and corporate donation and sponsorship has led to development of the cutting edge Marcus Stroke and Neuroscience Center and the Avon Foundation Breast Health Center. If the model works optimally, this type of program development will not only serve the Grady community, but will begin to attract privately insured patients to use services not available elsewhere. The changes in Grady that facilitated the partnerships necessary to make the health system viable included community political leaders sharing control with “outside” board members who had access to donors. I am not familiar with the operation of Boston Medical Center, but examining the political control structure and looking for ways to involve the corporate community of Boston might provide better long term solutions than continuing to financially bail out a failing hospital without identifying the underlying structural causes of its financial problems.

  • Max

    If you agree with universal coverage, do not weep for BMC. There will never ever be a way to pay for it without steep 70% tax brackets. Ever. You will never cut enough. You will never save enough. You will only get there through the sweat and broken backs of the workers and income generators in this country. There is nothing in this universe that will cover everyone or most everyone without the steepest taxation on earth. And then, everyone will stop working like negative reinforcement suggests (I certainly will and I’ll get mine free off of someone else’s sweat).

  • doc99

    “If you think Health Care is expensive now, wait until it’s free.”
    PJ O’Rourke

  • http://thehappyhospitalist.blogspot.com Happy Hospitalist

    They need to move the hospital to the suburbs and build a lack with flocks of pretty geese. Then put big screen TVs in the waiting rooms.

    You’ll see people with private insurance flock in like the geese on the lake.

    Then they can provide charity care without government assistance.

    Isn’t that how charity works?

  • ninguem

    I’d heard that Boston City used to have sort of competing medical services at one time. A Harvard Service, and either a Tufts Service or a Boston University Service, maybe all three, I don’t know.

    They sort of competed, as they didn’t want to look bad compared to the other service.

    Is that accurate? I don’t know Boston medicine that well, I think the Boston City is part of Boston Medical Center, but I don’t know, my training was Midwestern.

  • DKBerry

    @GlassHospital…

    -Specialty hospitals focused on delivering most effective services based on a fairly common input and very common desired outcome are far and away more effective and efficient than the do everything, big general hospital. Amongst support I suggest reading any number or thesis by Harvard’s Dr. Regina Herzlinger such as “Who Killed Healthcare?” reviewed here… http://www.manhattan-institute.org/healthcare/.

    -Don’t need an “eight wing public monstrosity” to support the low end walk in patient. Simply need to rethink how to deliver outcomes for the predominant patient most effectively and efficiently absent the ten or so stovepipe special interest groups living inside the walls. We need health care services focused on delivering outcomes not focused on how to divide up the revenue stream.

    -There are plenty of other hospitals in the area that can provide higher end secondary care services to BMC’s patients. BMC would better serve the community if it were to become a mega community health center with a medical home construct. Holding onto providing higher end secondary care services to offset low end walk in primary care services is a recipe for insolvency.

    -Understand Kevin was pointing the finger at MA legislature as having shorted BMC. That’s not the cause of BMC’s dilemma. Am I to think that if MA tax payers paid BMC the charity reimbursement rate equivalent to Medicaid that everything would be hunky-dory? BMC’s primary problem is delivering services the same way it (and most other general hospitals) always has.

    -Those who subscribe to public funding the delivery of more and more services through an archaic, rusty general hospital pipe are bound to be very disappointed when servcies break down and costs continue to escalate.

    -Ya’ll in Massachusetts are at the tip of the health care reform spear that is about to sink itself deeper in muck that MOST of the rest of the country (especially RED states) have no interest in following.

    @Sarah W…

    -Transparency is irrelevant to a patient who pays nothing.

    @Richard Leff…

    “development of the cutting edge Marcus Stroke and Neuroscience Center and the Avon Foundation Breast Health Center. If the model works optimally, this type of program development will not only serve the Grady community, but will begin to attract privately insured patients to use services not available elsewhere.”

    -Will be surprising to the folks across town at Emery University that those services aren’t currently available in Atlanta.

    -Key condition in your statement above … “…If the model works”. Only in health care is there the mind set to spend a zillion dollars of investment capital in advance of determining whether the ‘model works’.

    -Contemplating standing up ANOTHER high end tertiary level facility in Boston is laughable. I think all the juicy stuff is already highly competitive. BMC might become a center of quality for sprained ankles and ingrown toenails.

    @doc99

    Amen!

    • http://www.conisus.com Richard Leff

      Doc 99, I couldn’t agree with you more about validating the model before spending gazillions of dollars. On the other hand, it sounds like Boston Medical Center is on the verge of extinction. If such a facility is really needed in Boston (and Kevin and several others seem to think so) some immediate action is necessary. Private-public partnership is one possible direction (perhaps not a solution). Criticism is fine and easy. What would you suggest?

      By the way, Emory is the driver behind medical improvement at Grady so I don’t think anyone there was or will be surprised by improvements at Grady. There seem to be plenty of strokes to go around and Grady is the level 1 trauma center for Atlanta so having a center that specializes in neurologic trauma care makes great sense. By the way, caring for strokes and breast cancer is primary and secondary care, not tertiary and the programs serve a population, much like Boston Medical Center, that have significant barriers to accessing other facilities.
      This model might not apply to BMC but it has clearly benefited Grady which has a similar patient demographic and similar reimbursement challenges to BMC.

  • Marc Gorayeb, MD

    “Universal coverage … to be fair, is something that needed happen.”
    I like the passive voice, Kevin. It needed to happen… Darned if I know HOW it would happen. That’s not my problem, right? Well, it will be all our problem, because all our insurance premiums are about to go through the roof.

    Reminds me of another “needed to happen” bit of social engineering: Barney Frank’s affordable housing for everyone.

  • Khalil

    DKBerry,
    If you had read the article instead of talking about generalities, you would have learned that BMC had been running at a profit for the past 5 years.

    What changed? Well, the plan was for as more people move from “uninsured” to “insured with Medicaid,” the state would cut the “special payments” made for caring for the uninsured, and would increase the payments for Medicaid patients. The state cut the “special payments” made for caring for uninsured, but also, last year, the state cut reimbursements by about 25% per Medicaid patients.

    Now, the Patrick Administration is acting shocked and appalled that BMC has encountered financial difficulties.

    You can’t mandate that BMC treat everyone, then cut public support, and expect a happy outcome, regardless of the make-up of the hospital. Do you really think BMC would do better if it cut out all the services it offered that appeal to people with private insurance (i.e., profitable service), and instead focused on primary care and emergency care (not profitable service)?

    • HM

      Fianlly, someone who not only reads, but retains and analyzes information from the article.

      Every comment I’ve read, except that of Khalil, either offers political viewspoints or solutions that are either impossible or unnecessary as it pertains to this dilemma.

      16,000+ a year are served by BMC’s ER alone, That is over 4 times the amount of the next most close amopunt by a hospital in Boston. Guess what: shutting down is not an option, because, if you talk to all the other hospital ER’s, they’ll tell you their at max operations as it is.

  • notmd

    Kevin..who screwed who?..
    1)the patients screwed the hospital by not enrolling in medicaid in the preceeding years..
    2)the hospital screwed itself by living off of charity care pools and special payments rather than aggressively enrolling patients into community medicaid..
    3)the state watched as the above two parties were screwing around ..they knew more patients could be enrolled but why increase costs and hospitals were eating off the tray of charity and special payments..

    there is enough parties to blame however that doesn’t solve the SHORT TERM problem of survival while we wait for Medical Homes,ACO’s ,primary care ,specialized hospitals to save us..I would like to see the health care industry committed to the long term plans which has one metric..reduce admissions..and i would like to see the government believe those plans and provide the bridge to the future..I think we all don’t want to see our health care system fall off the cliff

  • PAULMD

    I went to medical school there in the late 80s early 90s. I’ll just pay one of my loan payments early, that should hold them for a couple more weeks.

  • Healthcare4Profit

    do we need 10 hospitals in the boston metro area offering advanced cardiology care? neuro surgery? bi-plane imaging for neurology? If you are concerned about BMC, the first question that comes to my mind is “why do we have a VA Hospital in boston?”. Wouldn’t you rather be treated at BMC than the VA? At Brigham, MGH, BI, Dana Farber, Faukner Clinic, and who ELSE, rather than the VA? It’s time to let our vetrans get the care they deserve. It’s time to look at competing high end care. It’s time to look at malpractice reform. We have lots of opportunities, and I think that we need to start looking to capitalize on them for the benefit of the patients.

  • Anonymous

    While there are many problems affecting hospitals at this time, one problem, while it will not solve all of their problems, is that they are basically run by poor business people. While working for many hospitals in the greater Boston area in the billing department, I have seen the waste the business departments have inflicted on the hospital revenue. I am not talking about revenue that may or may not have been collected. I am talking about revenue that was guarenteed to be collected from insurance companies if the hospitals folowed simple rules set out by the insurance companies, such as getting authorization. sending in medical records for workers compensation claims. Sending patients to doctors in network. Getting proper information from patients in order to bill the proper insurers. As a manager and supervisor I have seen very little cooperation between different departments in helping each other out to maxamize billing. And yes Boston Medical was one of the hospitals that I worked for.
    RJFPBS@AOL.COM