MHA Says Bay State Hospitals Cut $3.1B in Expenses

An updated Massachusetts Hospital Association in-house study released this week shows that member hospitals in the Bay State trimmed $3.1 billion in operating expenses in the past two fiscal years.

This week's report, an update of MHA's April Hospital Costs in Context: A Transparent View of the Cost of Care report, details expenses of Massachusetts hospitals for fiscal year 2009 through the second quarter of FY 2010, and shows hospital cost trends have moderated substantially and in some cases reversed in response to the financial crisis and recession.

"The most current data shows that the trend in hospital expense growth reported earlier this year has abated," said Lynn Nicholas, president/CEO of MHA. "As a result of hospital cost management efforts, expense increases fell 65% from 2008 to 2009—from 8.6% to just 3%."

"All told, we're estimating hospital expense reductions worth some $3.1 billion in Fiscal Years 2009 and 2010. Expense growth has dropped back to very moderate levels, and this welcome change should be acknowledged by state policy makers and insurers," Nicholas said.

At the same time, payments to hospitals for the last two fiscal years were reduced more than $2.4 billion than they would have been had the FY 2004 – FY 2008 operational expenses trend continued, the study said.