Center for Studying Health System Change

Boston Health Care Market Stabilizes with Continued Success of Not-For-Profits

News Releases
March 29, 1999

FURTHER INFORMATION, CONTACT:
Alwyn Cassil: 202/264-3484

ASHINGTON, D.C. -- According to a Community Report released today by the Center for Studying Health System Change (HSC) many of Boston’s unique, longstanding market characteristics - such as the dominance of not-for-profits and an activist government - remain in place. While at the same time, other features - such as rising anti-managed care sentiment and a limited number of health plans to serve the growing number of Medicaid managed care enrollees - have become new challenges facing the market.

The Community Report , "Market Stabilizes Around Five Large Organizations," highlights the key changes in the Boston heath care market since 1996 as well as Boston-specific data from HSC’s household, physician and employer surveys. Boston is one of 12 communities that HSC researchers are tracking over time to understand how local health care systems are changing and the impact of those changes on consumers.

"In national surveys, Boston area residents have consistently ranked their local non-profit plans among the highest, yet the managed care backlash has been as strong - if not stronger - in this market as compared to others," said Paul B. Ginsburg, president of HSC. "In response, plans are now assuming a lower profile by limiting their scope of activities, reducing product lines and selling off owned provider capacity."

As health plans retrench, hospital-based delivery systems appear to be operating from a position of relative strength. Consolidation in recent years led to the creation of large systems centered around Boston’s prominent academic medical centers. The two leading systems - Partners and CareGroup - have built large provider networks and established the infrastructure to manage risk contracts. Although these contracts are currently only a small part of the providers’ business, they have increased substantially over the last two years and are expected to continue to grow in importance.

With a heightened focus on risk contracts, tension between community hospitals and the academic medical centers has increased. Community hospitals are concerned that the drive for better risk adjustment payment methodologies is part of a larger academic medical center strategy to attract patients who had historically received care at community hospitals. The increasing number of risk contracts also has been a source of contention between plans and providers over who controls patient referrals.

Another major development in the Boston market since 1996 has involved Medicaid. While Medicaid enrollment has increased, plans serving this population are consolidating or exiting the market. Two commercial plans with broad and loosely managed networks - Blue Cross and Blue Shield of Massachusetts and Tufts Associated Health Plan - are no longer contracting with the state’s Medicaid program, leaving Harvard Pilgrim as the only plan serving the Boston Medicaid market.

Research for the Community Report is conducted as part of HSC’s Community Tracking Study (CTS), which involves tracking 60 communities every two years through surveys to understand the effects of health system change on consumers. Boston is one of 12 communities that is being studied more intensively through site visits to understand how local market factors affect change.

Health System Change - an independent research organization funded exclusively by The Robert Wood Johnson Foundation - provides objective, timely analyses about changes in the nation’s health care system and their impact on consumers to private and public decision makers. Health System Change, based in Washington, D.C., is affiliated with Mathematica Policy Research.