THE LONG-RUNNING drama over the Dana-Farber Cancer Institute’s decision to end its affiliation with Brigham and Women’s Hospital and its parent organization, Mass General Brigham, and strike a new partnership with Beth Israel Deaconess Medical Center is coming to a head. By the end of March, the state Department of Public Health, which must sign off on the plan, is expected to render a decision on the proposal, a move that could include attaching conditions to the new affiliation structure.
Currently, Dana-Farber is principally an outpatient cancer care facility. At the heart of its proposal is a plan to build a new 300-bed inpatient cancer hospital in the Longwood Medical Area in Boston. Filling those 300 beds will have ripple effects across Eastern Massachusetts, affecting big academic medical centers as well as smaller community hospitals that treat adult cancer patients.
While research scientists and clinicians focus their war on cancer, this has become a war for cancer dollars.
Dana-Farber and Beth Israel maintain that Boston needs a specialized cancer hospital, which they say will improve the quality of patient care while decreasing costs. Mass General Brigham, which is losing its affiliation with one of the country’s most renowned cancer centers, has challenged that argument. Meanwhile, Mass General Brigham — the state’s largest provider system — is ramping up its own efforts to draw cancer patients, promoting the comprehensive and integrated approach of its vast network through a major advertising campaign under the theme “We’re One Against Cancer.”
As the process moves to a conclusion, state officials are hearing the competing claims of providers with strong financial interests in the outcome. They should make sure the project ultimately advances the public interest. To do that, they need to carefully scrutinize the available evidence, which we try to summarize here.
In February, Department of Public Health staff gave the plan tentative approval based on an outside cost analysis paid for by Dana-Farber. That analysis concluded that the 270 proposed new beds under the Dana-Farber license are needed and that spending increases would likely be minimal. (In reviewing the plan for a 300-bed hospital, the analysis takes into account 30 existing inpatient cancer beds at Brigham and Women’s Hospital that Dana-Farber has under its state license.)
The cost analysis projects that slightly over 60 percent of the cancer inpatient volume now occupying other Brigham and Women’s beds would move to the new Dana-Farber hospital and Beth Israel Deaconess Medical Center. (Under the plan, medical oncology patients will be treated at the Dana-Farber hospital while surgical oncology patients will be treated at Beth Israel.)
Mass General Brigham carried out its own analysis, concluding that less than half of the proposed 270 new cancer beds are needed. It estimated that the new Dana-Farber hospital would draw no more than 30 percent of Brigham and Women’s cancer patient volume occupying its currently licensed beds.
Mass General Brigham argues that Dana-Farber would have to lure patient volume from other area hospitals that now offer adult inpatient care in order to fill the beds they want to add. Doing so, Mass General Brigham says, would raise both commercial insurance and Medicare hospital spending at a time when policymakers are working to slow the state’s growing per capita rate of medical care spending.
Underscoring concern about health care costs is a new report from the state Center for Health Information and Analysis that health care spending in Massachusetts soared by 8.6 percent in 2023, to $78.1 billion, more than twice the state benchmark of 3.6 percent.
The state’s Health Policy Commission recently released its own 100-page cost and market impact review, using different analytics. It predicted net inpatient movement away from Brigham and Women’s somewhere in between the competing estimates of the analysis commissioned by Dana-Farber and the Mass General Brigham report.
Overall Demand for Cancer Beds: After citing a range of factors at play, the Health Policy Commission said it can’t predict the future overall demand for inpatient cancer beds in the state. It therefore reserved judgment on one of the chief questions looming over the proposal — whether 270 new cancer beds in the Longwood Medical Area are too many, too few, or just the right number. The commission noted that one important factor is the current crisis in nursing home staffing, which has created a bottleneck holding up patient discharges from hospitals. If the state is able to address that issue, the report said, it may well be that the overall need for adding new inpatient acute-care beds in the state, including cancer beds, can be held in check.
Costs to Commercially Insured Populations: The Health Policy Commission projected net inpatient savings from Dana-Farber taking admissions away from higher priced hospitals, including Brigham and Women’s. The mid-range estimate of net savings is $21 million, but that is offset by an estimated $39 million more in outpatient spending, primarily fueled by moving outpatient chemotherapy from Beth Israel Deaconess Medical Center to Dana-Farber, which has much higher prices for such services.
Overall commercial spending may rise further as Beth Israel and Brigham and Women’s refill beds of cancer patients that have moved over to Dana-Farber. Finally, though Dana-Farber has low inpatient prices now—a smaller factor in its finances with only 30 inpatient beds leased at Brigham and Women’s Hospital — a new 300-bed hospital could motivate them to want to increase inpatient prices substantially after doors open. If that happened, the Health Policy Commission predicts that the inpatient savings it predicts would evaporate.
Costs to Medicare: The report estimates $7.5 million in Medicare savings from patients projected to move to Dana-Farber from other hospitals that are currently paid higher Medicare rates. However, we think the Mass General Brigham analysis, projecting Medicare spending that is tens of millions of dollars higher, is likely more predictive of what may happen. Mass General Brigham maintains that since Dana-Farber is part of a small set of US cancer care facilities that get paid a special cost-based reimbursement from Medicare, it will likely receive much higher Medicare payments as its per admission costs rise substantially in running a new 300-bed hospital. Since this is all federal money that comes out of Washington, however, any bump in the state’s measured per capita medical spending from this would be largely ignored by our state policymakers.
Financial Impacts on Other Hospitals: The Health Policy Commission projects that the new Dana-Farber hospital and affiliation with Beth Israel may draw $93 million in annual revenue from other Massachusetts hospitals for volume that moves to both Dana-Farber and Beth Israel. The biggest losers, therefore, could be community hospitals and other non-Mass General Brigham academic medical centers that serve adult cancer patients. Some of those hospitals are financially vulnerable now, so this is a significant concern, even if a possible Dana-Farber hospital opening is still four to five years down the road.
Workforce Impacts: Mass General Brigham worries about impacts on the state’s health care labor market, with Dana-Farber needing to hire 2,400 new workers for a new hospital. The Health Policy Commission did not study this issue in detail, only noting the possibility of more labor costs to all providers in a continuing tight labor market for health care workers.
The complicated issues raised by the Dana-Farber plan are just the sort of thorny decisions anticipated by the Legislature when it amended the law late last year governing the Department of Public Health’s review of health care expansion proposals. The change directs the department to consider any analyses by the Health Policy Commission before deciding on approval of a project and the attachment of any conditions.
We think there needs to be a substantial strengthening of the conditions presented in the tentative approval in February from the Department of Public Health along these lines:
- First, DPH needs to articulate why 300 new hospital beds is appropriate, especially in light of the Health Policy Commission conclusion that it was unable to confidently project future demand for cancer beds in the region.
- It would be wise to place multi-year price growth restraints on inpatient prices at a new Dana-Farber hospital – as was done when Beth Israel merged with Lahey Health in 2019.
- The department should seek Dana-Farber’s agreement to limit price increases for outpatient services, especially its high-cost hospital administered cancer drugs, to be no more than 30 percent above the average payment to all other providers in the state. This may even require a commercial price freeze for some outpatient services for a few years.
No matter what the Department of Public Health decides on this project and any required conditions, we will continue to see high-stakes maneuvering between Dana-Farber and Mass General Brigham to draw new cancer patients to their systems of care. The prospect of a high-cost duopoly in cancer care in the state, with less community cancer care, is a legitimate worry. We all want the world-class cancer care and research that both of these provider systems can bring, but we also need an overall functioning, accessible, and affordable health care system in our state.
The state’s job is to make sure that the ultimate winners from the approval of proposed health care expansions or market transactions are not just any of the warring institutions, but Massachusetts residents.
Paul Hattis is a senior fellow at the Lown Institute. John McDonough is a professor at the Harvard T.H. Chan School of Public Health.
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