Healthcare Market Assessment: Northern Berkshire County, Massachusetts
Translating Strategy into Facility Solutions

September 17, 2014
Stroudwater Associates

Engagement Overview
•	As a result of the closure of North Adams Regional Hospital (NARH) in March 2014, the Massachusetts Department of Public Health, Office of Rural Health engaged Stroudwater Associates (Stroudwater) to provide an independent and objective third party assessment of the healthcare market in the North Adams region. 

•	The purpose of the engagement is to evaluate the viability of healthcare services considering existing and future healthcare market conditions. 
•	Stroudwater’s assessment does not include an analysis of factors or decision-making leading to the closure of NARH.

Approach Included Qualitative and Quantitative Analysis
•	Several community meetings, group and individual interviews took place throughout the Summer of 2014.

•	Data and studies completed for North Adams Regional Hospital (NARH), or about the North County service were reviewed, including:
•	2012 and 2013 Community Health Needs Assessments
•	2011 Critical Access Hospital analysis 
•	Northern Berkshire Health Professional Shortage Applications
•	NARH volume trends prior to closure

•	Historical and projected utilization for inpatient and outpatient services generated from the North County service area was analyzed.  State and national trends in care delivery were considered.

Industry Overview

Unsustainable Growth of Healthcare Costs
•	Projected 2022 US healthcare expenditures reach $5 trillion

•	Healthcare costs have increased over time to more than 17% of GDP

•	Since 1999, health insurance premiums and workers’ contributions to premiums have dramatically outpaced inflation and wage growth

•	The percentage of workers enrolled in high deductible health plans have increased from 10% in 2006 to 38% in 2013, with even greater increases among small employers (3-199 workers)

•	These factors combine to exert downward pressure on utilization of healthcare services, particularly on elective, inpatient, and high cost procedural and diagnostic services

The Effects of Changing Markets
•	Increased out of pocket costs results in consumer involvement and “price shopping” on where to get services

•	Pressures to reduce costs in areas with high utilization will face bigger declines in the future

•	Payment systems changing to reimburse providers for “population health” brings larger geographic areas together

•	Industry changes have results in mergers and acquisitions among hospitals being at historical highs

•	Physicians are now most commonly employed by hospitals / health systems

•	Health systems are increasingly partnering outside the walls of the hospital with community agencies, primary care, and other providers

Market Assessment 

North County Service Area
A map of northwestern Massachusetts is included in the document showing the towns that are included in the North County Service area as noted in the following text. 

The North County Service Area, identified in green in the map, includes the towns of:

•	North Adams
•	Adams
•	Williamstown
•	Cheshire
•	Savoy
•	Drury
•	Rowe
•	Monroe Bridge

In addition, some use of the local delivery system from areas outside of Massachusetts, including patients who travel from Vermont and New York ZIP codes, and students and visitors who are permanent residents of another area, yet may need to access the local delivery system. Using historical data, Stroudwater determined this resulted in a 15% “in-migration,” and included this in the study for planning purposes. 
Community Health – What Matters?

A diagram shows that 80% of the factors impacting community health are not related to access or quality of the healthcare system, but instead are related to health behaviors (30%), social and economic factors (40%), and the physical environment (10%). 

North County Community Health Needs Assessment
This page links the diagram showing health behaviors, social and economic factors, and physical environment contributing substantially to good health outcomes, with findings from the North County Community Health Needs Assessment as follows: 

•	Alcohol, substance abuse, obesity, smoking, and mental health are the disease and health risks of greatest concern among members of North Berkshire County. 
•	1/3 of residents said that, “there are times when they cannot go to the doctor when they are sick or need a checkup.”
•	The need for transportation is the major obstacle, cost, and availability of appointments were also barriers for a significant number of people. 

Interview Summary
•	Stroudwater received input from over 100 stakeholders over the course of three visits to the community.  
•	The interview schedule was organized by the Massachusetts Department of Public Health, State Office of Rural Health. 
•	A broad spectrum of stakeholders―including consumers, leaders of local organizations, social service agencies, and healthcare professionals formerly practicing at North Adams Regional Hospital―participated in the process. 

•	The most frequent needs cited for local healthcare services were the emergency room and improved access to primary care. 
•	A number of stakeholders expressed appreciation for Berkshire Medical Center’s (BMC) role in re-establishing emergency services and further developing supporting diagnostic imaging services. 

Interview Summary
•	Stakeholder interviews indicated a wide diversity of opinion regarding the need for acute inpatient services to treat medical conditions. 
•	Obstetrics services were the most commonly cited needs for hospitalization. 
•	An active part of the community, led by labor unions and former hospital employees, advocates strongly for re-establishing inpatient care. 
•	Other stakeholders cited the need for technology and access to specialists as examples supporting the consolidation of acute care inpatient services at BMC, where these resources are already available.

Market Share Trends – North County
This chart indicates that the market share at North Adams Regional Hospital had been steadily declining in the North County. The data presented shows a decline from about 60% of the market share in 2008 to about 52% of the Market share for both Medicare and all payers. 

The trends were consistent for both the Medicare population and for the total patient population. 

In the past, approximately one of every two hospitalizations of North County residents occurred outside of the North County area. A portion of the services leaving the community would likely be for accessing specialty care that was not available. Patient choice and preferences are likely the other major contributing factors. 

Average Length of Stay (ALOS) Trends – North County
This chart indicates that the average length of stay at North Adams Regional Hospital was lower than for the population overall in the market area from the years 2008 through 2011. 
Historically, North Adams Regional Hospital had a substantially lower average length of stay than North County overall. This means that residents who received care outside of the community tended to be hospitalized for longer and for more complex conditions. This shows that patients admitted in North County were less sick or had lower “acuity.”  

Recommendations – Community Coordination 
•	Stroudwater recommends: 
•	Stakeholders in the North Adams region develop a shared vision of improving the community’s health status by aligning medical services available to the community with social services and other community assets in support of health status improvement. 
•	Improved coordination between existing groups representing healthcare providers, state programs, payers, and consumers. 
•	Massachusetts Department of Public Health and other elected officials help to secure funding to support community leaders in pursuing the vision of a healthier North County and in the efforts to improve coordination between existing groups.
•	BMC leadership remains involved in North County activities and continue its efforts to engage stakeholders from North County.

Demand for Healthcare Services

Need for Physicians – Primary Care
A standard approach to evaluating the need for primary care coverage is to apply a ratio of providers to the population of the service area, allowing an incremental percentage to account for in-migration.

Using this methodology, Stroudwater identified a total market need of 33.2 primary care physicians, including family practice, internal medicine, OB/GYN, and pediatrics.

A list of providers in the community provided by the MA Department of Public Health shows that the community needs at least an additional six physicians, based on industry benchmarks. Of that total, the community is particularly underserved in general and family medicine.  

Recommendations – Primary Care
•	Stroudwater recommends:
•	Full support of Community Health Programs’ grant to expand primary care services and recruit additional providers to the North County’s existing BMC North campus site in a Federally Qualified Health Center. 
•	The Massachusetts Department of Public Health (MDPH) should work with federal officials to designate North County as a Health Professional Shortage Area. 
•	State resources be directed to assist North County primary care providers in the transition to a medical home approach, considering the geographic and economic challenges faced by the area.

Emergency Services Demand Summary
•	From 2010 through 2013, NARH saw a historical emergency department volume of between 20,700 and 19,500 per year, against a projected total North County demand of 26,000 visits. Truven Health Analytics projects that emergency department demand in the area will grow slightly, between 1% and 2% annually.

•	Emergency department visits fall into two categories: critical emergency care and urgent care. Truven projects the North County distribution to be 58% urgent versus 42% emergent. 
•	NARH ED volume’s mix has historically been approximately 75% urgent and only 25%  emergent.

•	The analysis shows that emergency services will continue to be in demand for the North County area, but that the distribution of both space and function should skew towards urgent care services, with appropriate policies and procedures in place for transferring or redirecting more acute visits to other regional providers. 

Ancillary and Outpatient Services Demand Summary
•	The operation of the freestanding emergency room, the support of primary care, and the provision of accessible, low-acuity services to patients are all factors in assessing ancillary and diagnostic service demand. 

•	Stroudwater’s approach to evaluating the North County market demand was to reflect only those volumes expected to be done at a hospital, hospital outpatient, or emergency department site of service.  This excludes procedures and diagnostic services typically provided within the physician’s office. 

•	Sufficient North County need exists to justify providing laboratory, x-ray, computed tomography (CT), and ultrasound at the BMC-North site. There is also significant market demand for other diagnostic imaging modalities, including magnetic resonance imaging (MRI) and mammography.

•	Ambulatory surgery demand from the primary service area supports the consideration of a surgical program in the North Adams area.  The specifics of the program will hinge on the viability of physician recruitment as driven by sufficient procedural volumes to keep physicians practicing efficiently. 

Recommendations – Locally Delivered Services   
•	Stroudwater recommends:
•	Maintaining access to emergency services in North County, as well as diagnostic imaging and laboratory services in support of both the ER and local ambulatory care access, 
•	Development of urgent care or walk-in primary care services to expand access to low acuity services. 
•	Expanding outpatient services, disease management, and prevention/ wellness services that can be safely provided in North County, such as screening mammography.
•	Re-establishing gastroenterology and ambulatory surgery services at the BMC North campus, provided that physicians can be recruited and retained to practice in the area. 

Inpatient Demand
A diagram shows that…. 

Demand for inpatient services is a function of population, utilization within the population, market share, and the average length of stay. 

People typically admitted to rural hospitals are less sick and do not require the regular care of specialists, therefore demand is further adjusted for acuity. 

Higher than Average Hospitalization Rate in North County
This chart shows that the average hospitalization rates for the North Adams Massachusetts area is relatively high at 144.5 normalized discharges per 1,000, while Massachusetts is 120.6 and the United States is 121.1. It also indicates that this is the second highest in Massachusetts. 

But, it also makes the point that hospitalization rates are on the downward trend with predictions of from 93 to 61 for the US in the year 2021.   

Medical Inpatient Demand 
The volumes generated in the North County indicate demand for inpatient medical/surgical of 31 beds. Using an in-migration rate of 15%, the total demand ofr inpatient beds would equal 35 beds. 

•	This is to accommodate 100% of North County discharges and additional in-migration, excluding obstetrical, substance abuse, and psychology services.
•	Historically, the market share was 50%-60%, resulting in a demand of 18 to 21 beds. 

Reductions to inpatient utilization reduces the need for medical/surgical beds in the future.  

Over $2 Million of Excess Costs to Operate Beds in North County
A table is used to indicate the costs for meeting the market acute care inpatient demand compared by potential site of services: BMC in Pittsfield and BMC North in North Adams. 

Stroudwater estimates an annual net increase in costs of $2.1 million under a model of providing inpatient medical-surgical care at the BMC North Site.  The analysis includes an estimated $5 million in staffing costs and $1.4 million in variable costs (e.g., supplies, meals, etc.) to care for an average of 15 patients per day.  This does not include additional costs for obstetrics.  Increasing costs to deliver lower acuity health care is inconsistent with the trends in the industry.  

Recommendations – Inpatient Services
•	Stroudwater recommends developing a clinically integrated delivery system with BMC, to include limited inpatient services provided at BMC North only if designated as a Critical Access Hospital. 
•	Designation as a Critical Access Hospital is the only option to cover the additional costs required for providing inpatient services at BMC North.  Without this designation, the community need for inpatient services should be provided at BMC to increase efficiency and lower costs.

Obstetrical Demand Summary
•	Birth rates have been falling nationally and in Massachusetts.

•	A total of 462 deliveries are projected for the North County service area. Historical deliveries at NARH from the North County ranged from 237 to 223 from 2008 through 2012. Before its closure, two of the three OB/GYN physicians in the area stopped providing delivery services at NARH.

•	For the total market, the total need for inpatient obstetric services would be 3 LDR labor and delivery rooms and between 6 and 8 postpartum rooms. 

•	Patient choice and referrals of high-risk pregnancies result in less than 100% of this need being served locally; historical market share ranged between 78% and 66%. This reduces the actual demand for obstetric rooms to serve North County residents to approximately 2 labor and delivery rooms per day and between 4 and 6 postpartum rooms. 

Obstetrical Demand Summary
•	Some local practitioners identified operational barriers and quality concerns with providing inpatient obstetrics services in North County. 
•	Cited need to have a minimum of three obstetricians committed to doing deliveries and recruitment challenges and costs of accomplishing this were cited as obstacles. 
•	Costs and coverage issues for pediatric, neonatal care, and anesthesia personnel to cover call were also cited. 

•	Published studies have indicated that hospitals providing lower volumes of deliveries have poorer outcomes on average when compared to high volume delivery units. In addition, the American Society of Anesthesiologists and The American College of Obstetricians and Gynecologists have concluded that when evaluating the goals for obstetrics care, “deficiencies were most evident in smaller delivery units.” Their findings indicate that 34% of hospitals have fewer than 500 deliveries per year and that “providing comprehensive care for obstetric patients in these small units is extremely inefficient, not cost-effective, and frequently impossible.” 

Recommendations – Obstetrics Services
•	Stroudwater recommends the development of a coordinated effort for providing locally accessible prenatal care and education, together with a plan for appropriate transportation assistance to other nearby facilities for childbirth and a comprehensive protocol for addressing emergencies.

•	It will be important to provide coordinated access throughout the region for a comprehensive range of services needed during pre-conception, prenatal, pregnancy, postpartum and newborn periods for the health of the mother and baby. 

Behavioral Health Demand Summary
•	Accommodating the behavioral health needs of the primary service area, as reported in the June 2014 Statewide Mental Health Advisory Committee Report is going to require a combined effort of community and outpatient services, as well as traditional inpatient services.

•	A behavioral health and addiction services trust was recommended for funding community level care and development of a statewide plan to strengthen outpatient behavioral health services.

•	Assuming NARH’s historical average length of stay for behavioral health patients, for 100% North County market share and 15% additional inmigration, the combined inpatient bed demand for behavioral health and drug abuse is 19 beds.

•	Decreasing utilization by 10% or increasing by 10% would produce a range of 17-21 beds, again to accommodate 100% market share.

Recommendations – Behavioral health services
•	Stroudwater recommends the further development of behavioral health and substance abuse services with targeted outreach to at-risk populations, building on the existing capacity of the Brien center services. 

•	A more detailed analysis of community mental health and drug abuse resources, including those already provided by state and local social service agencies, should be considered. 

Acknowledgements

•	Stroudwater would like to acknowledge the over 100 people in Berkshire County, public and elected officials that contribute their time, energy, resources, and perspectives to this study. 
•	Richard Alcombright, the Mayor of North Adams, has been very active in providing both direct feedback on community needs as well as organizing opportunities for other stakeholders.
•	Other elected officials including Senator Ben Downing and Representative Gailanne Caridddi for their input on the process and perspectives on constituent needs. 
•	The Berkshire Community Coalition for allowing Stroudwater to use space for stakeholder meetings and focus groups, as well as the American Legion for hosting the “Tuesday night meetings” and the Massachusetts College of Liberal Arts for the community meetings.
•	Secretary John Polanowicz, Cathleen McElligott, and their student intern Peter Bergstrom, for identifying stakeholders, scheduling meetings, and providing supplemental data to the study.