For Immediate Release - March 21, 2016


HPC identifies challenges facing community hospitals, details the critical role they play in the Commonwealth, and outlines the imperative of promoting a thriving community-based health care delivery system.

BOSTON – Monday, March 21, 2016 – Today, the Massachusetts Health Policy Commission (HPC) issued a significant report on the future of community hospitals, Community Hospitals At A Crossroads: An Examination of the Massachusetts Health Care System. The report (available here) details the value many community hospitals contribute to our health care system by providing cost-effective, accessible care that is particularly important for some of the Commonwealth’s most vulnerable populations. The report also describes the significant challenges facing community hospitals, both from evolution in the health care delivery and payment system, as well as from persistent market dysfunction. The report, which was spurred by the closures of the North Adams Regional Hospital and Quincy Medical Center, includes more than a year of research, analysis, and interviews with providers, payers, elected officials, and academic experts.

“Community hospitals play an important role in our health care system, offering high-quality, low-cost care in the community, especially for many of the Commonwealth’s most vulnerable residents,” said David Seltz, Executive Director of the HPC. “This report highlights the challenges community hospitals face to remain sustainable in our system. I look forward to the important discussion we will have with a wide range of stakeholders on how best to create a successful future for community hospitals.”

The HPC will convene stakeholders, including community hospital CEOs, consumer advocacy groups, business organizations, payers, commonwealth agencies, and other key market participants (agenda available here) on March 29, 2016 at 9 a.m., to discuss challenges and opportunities for community hospital transformation across the Commonwealth. This community conversation will include a panel discussing the hospital’s perspective and a panel discussing stakeholder reaction.

Community hospital study: key Findings

Overview of Key Findings

Over the past three years, the Commonwealth and the HPC have taken significant steps to slow the growth of health care costs. However, a critical sector of the health care delivery system—community hospitals—is facing unprecedented challenges, threatening progress toward creating an efficient, high-quality health care system accessible to all patients in Massachusetts.

The Value of Community Hospitals to the Massachusetts Health Care System 

Community hospitals provide valuable contributions to the Massachusetts health care system and play an important role in the community.

Access to Care:

  • Community hospitals provide convenient and local access to services. They serve a high proportion of government payer patients and others who may face additional barriers to access, such as transportation, language, and mobility barriers. HPC also found that the average drive time for patients living near a community hospital was 9 1/3 minutes. In many parts of the state, mainly rural areas, the drive times for inpatient care would more than double if the hospital were to close.

Quality of Care and Community Engagement:

  • Community hospitals generally provide high quality health care. While there is some variation among community hospitals, HPC found that on nationally accepted measures of quality, most community hospitals tend to perform comparably to most academic medical centers (AMCs) and teaching hospitals for routine care.

Spending and Cost Efficiency:

  • Most community hospitals provide care more efficiently than most AMCs and teaching hospitals – on average, community hospitals spend nearly $1,500 less per inpatient stay as compared to AMCs. Spending at community hospitals is substantially lower for routine pregnancies and routine orthopedic procedures, with equivalent quality to higher cost AMCs and teaching hospitals.

Challenges Facing Community Hospitals

The most significant findings around challenges that community hospitals are facing include patient perception and hospital choice, changes to care delivery and payment models, and market dysfunction. Together, these challenges make the traditional community hospital operating and business models unsustainable.

Patient Perception of Value/Hospital Choice:

  • Many patients bypass their community hospital and travel to AMCs and teaching hospitals for routine care that could instead be provided at the community hospital. This can be mainly attributed to physician referral networks, patients relying on experiences from friends and family, brand recognition, and the belief that higher prices equal higher quality.

Increased Consolidation Drives Referrals to Higher Cost Providers:

  • Due to consolidation of providers over the last three decades, the majority of care in the Commonwealth is now provided by a relatively small number of provider systems. In particular, primary care providers (PCPs), which are instrumental to facilitating how patients move across the health care system, are increasingly affiliated with large systems. Primary care physicians affiliated with the largest 8 systems grew from 62% to 76% from 2008-2014.

Patient Migration Pulls Volume from Community Hospitals and Increases Health Care Spending:

  • Patients from across Massachusetts frequently travel to Boston for higher cost hospital care, including non-complex care that could appropriately be provided at community hospitals. In particular, the number of deliveries in community hospitals has decreased from 74% in 1992 to 50% in 2012. Similarly, 25% of all patients discharged from Boston AMCs are from outside of Boston and could have been appropriately cared for in a community hospital.
  • Patients who leave their home regions for community-appropriate care and choose a hospital in Metro Boston can increase health care spending by approximately $1,000 to $4,750 per patient, depending on the region.

Community Hospitals Disproportionately Serve Government-Insured and Vulnerable Patients and Also Receive Lower Commercial Prices:

  • Many community hospitals provide services to high proportions of patients covered by government payers, for which they receive lower rates than for commercial patients.
  • Many community hospitals also provide a disproportionate share of lower-margin services. The HPC found that while statewide occupancy of community hospitals’ medical/surgical and obstetrics beds is only just over half, occupancy of their psychiatric beds is nearly 100%.
  • Hospitals with higher public payer mix tend to have lower relative prices from commercial payers than other hospitals for the same services. This directly contradicts a common argument by higher priced hospitals that their prices are necessary to cover losses from caring for publicly-insured patients.

Inpatient Volume Continues to Decline, Challenging the Traditional Community Hospital Model:

  • Based on trends in utilization and anticipated changes in the state’s population, the HPC projects that the number of patients needing inpatient care will continue to decline over the next decade by 15%. Community hospitals have lower occupancy than AMCs and teaching hospitals, further challenging their financial health. 
  • Competition from urgent care centers and retail clinics also challenges the traditional community hospital model.

Hospitals Face Additional Barriers Inhibiting Adaptation:

  • Earlier this year, the HPC released a Special Report on Provider Price Variation, which showed that many community hospitals receive substantially lower prices than other hospitals that are not justified by differences in cost or measurable quality. Those hospitals that serve high proportions of government payer patients, including community hospitals, are doubly impacted by price variation.
  • Additionally, hospitals face barriers such as the need for investments to hire and/or retrain staff, purchase innovative equipment including telehealth platforms, upgrading electronic health records, and developing data analysis and performance monitoring capabilities.
  • Regulatory barriers and slow adoption of payment reforms also challenge community hospitals’ ability to transform.

From Community Hospitals to Community Health: Next Steps

The HPC has issued this report to inform an essential statewide dialogue about how to support the transformation of community hospitals and to how to rectify market dysfunction to achieve that vision. The report identifies a future vision of community-based health care that preserves the values of cost efficiency, local access, and high quality in a sustainable way. The report identifies three main topic areas that need further discussion: planning and support for community hospital transformation, encouraging consumers to use high-value providers for their care, and creating a sustainable, accessible, and value-based payment system.


The Massachusetts Health Policy Commission (HPC) an independent state agency that develops policy to reduce health care cost growth and improve the quality of patient care. Among other initiatives, the HPC is responsible for monitoring the performance of the health care system, analyzing the impact of health care market transactions on cost, quality, and access, setting the health care cost growth benchmark, and investing in community health care delivery system transformation . The HPC’s Board governs the activities of the agency. To learn more, please visit or follow us on Twitter @Mass_HPC