‘A new reality’: State’s decision against Mass Gen. Brigham’s suburban expansion could mean tighter regulation of hospital costs and growth

Experts say the rejection appears to be the first time in decades that DPH has stood in the way of hospital expansion, and could be significant as the agency launches another big project: the $434 million expansion. outpatient services by Boston Children’s Hospital.

“We have woken up to a new reality,” said Paul Hattis, senior researcher at the Lown Institute, a Needham-based healthcare think tank and former member of the Public Health Council. He said the decision was a lesson not only for MGB and Children’s, but also for Beth Israel Lahey Health, which has expanded into Massachusetts and New Hampshire as it seeks to compete with MGB. “They all need to see that the state will hopefully pay increasing attention to accessibility and market functioning.”

Still, questions remain about how much of Friday’s decision stemmed from a shift in attitude within the agency and how much was the result of broader political pressure. The Attorney General; the Health Policy Commission, the state health care oversight agency; and legislative leaders have all expressed concern about the expansion.

“Under normal procedure in an expansion that wasn’t as big as MGB, you probably wouldn’t have gotten the attention that this expansion did,” House Speaker Ron Mariano said.

Unlike hospital mergers and acquisitions, which are subject to oversight by the Health Policy Commission and the Attorney General, hospital expansions currently are not.

Mariano said more reforms are needed to ensure the commission and the attorney general regularly intervene on hospital expansions that could increase costs, and he pointed to a bill passed by the House that would include more extensive regulatory scrutiny when larger health systems establish facilities off campus.

At the very least, Friday’s decision departed from how the agency had previously reviewed expansion requests. DPH has rarely rejected everything outright, usually suggesting modest terms in response to concerns from competitors and watchdogs.

Hattis said that to his knowledge, the last time DPH rejected a hospital expansion was in 1983.

But Hattis said it felt like DPH staff had realized they had the power to refuse projects in their MGB review. In the two DPH staff reports released on the Massachusetts General Hospital and Brigham and Women’s Faulkner expansions, the DPH placed the burden of proof on the plaintiff to show how the projects would advance state goals, at the instead the agency is trying to prove why a project should’nt happen.

“I don’t think DPH really saw himself as having that power under the regulations until he woke up this time around,” Hattis said.

The decision also represents a broader scope of scrutiny for DPH, said Nancy Kane, an adjunct professor at the Harvard School of Public Health and a board member of the UMass Health System, an MGB competitor that has opposed to the outpatient expansion of MGB.

Previously, DPH exams focused on narrower questions, such as whether applicants could demonstrate a desire and some measure of need to grow, Kane said. In Friday’s staff reports, the agency looked in more detail at the market and how MGB’s plan could impact other hospitals and health care costs.

“I think DPH’s mission has been much less concerned with the broader issues of affordability and competition,” Kane said. “I hope the state as a whole will take a more active role in trying to model an affordable market and maintain some level of competition.”

While it’s unclear whether the agency would take the same approach for future projects, Harvard TH Chan School of Public Health professor John McDonough said state and legislative leaders had at least reported paying attention to health care costs.

In the case of MGB, McDonough said cost issues were so apparent that DPH could not ignore them. Attorney General Maura Healey did the unusual decision to undertake an independent civil inquiry, reporting last year that MGB’s planned expansion would ultimately increase health care spending across the state if it attracted patients from low-cost providers. Those comments were echoed by the state’s Health Policy Commission, which said the plans would increase annual health care spending between $46 million and $90.1 million. The agency also put MGB on notice for its past expenses.

Approving the expansion in light of those concerns would have overturned state cost containment laws, McDonough said.

“Everyone is watching, everyone is paying attention. And paying attention in a different way than they would have been two weeks ago,” McDonough said. “Things are different.”

Mariano said the kind of attention and focus from large state groups should be a mandatory part of the approval process, not just a fluke because a project is important. Although DPH is currently required to consider cost issues, nothing in its charter specifies what this should entail.

“Cost containment can be a superficial, bottom-of-the-box attempt to pull together numbers, or it can be in-depth market research,” Mariano said. “I would prefer it to be an in-depth market study, which is why in our bill we specify the involvement of people who can do a complete study if necessary.

While state officials have spoken with one voice in condemning parts of MGB’s expansion, some people are mourning the state’s decision.

Andrea Levy in Westborough has visited MGB facilities three times in the past week for tests and procedures related to her long diagnosis of COVID-19. The visits were part of two to three monthly visits to MGB facilities she has had to make since her diagnosis in April 2020.

Levy had been excited about seeing her doctor without driving into town.

“I was so disappointed when we saw this article. We were looking forward to it,” she said.

Jessica Bartlett can be contacted at [email protected] Follow her on Twitter @ByJessBartlett.

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