'Unsustainable'; What's driving up the cost of our health care?

• Position: NEWS

Byline: Aaron Nicodemus; Jay Whearley

The following correction was published in the Sunday Telegram on May 16, 2010:

The emergency room department and surgical wing at the former Hubbard Regional Hospital in Webster are open. The facility, now called Harrington HealthCare at Hubbard, also offers same-day surgery. The facility is operated by Harrington HealthCare System, which also includes Harrington Hospital in Southbridge. Because of a reporter's error, the Webster facility's status was incorrect in a story in last week's Sunday Telegram.

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COLUMN: NATIONAL MODEL? // MASSACHUSETTS HEALTH CARE

First of two parts

Bake sales saved the nonprofit Athol Memorial Hospital the first time around, Steve Penka says with a smile. Eleven years later, it took a big Tennessee-based, for-profit hospital chain to keep it in business. Mr. Penka, the president and chief executive officer, wears both a smile and visible relief these days because the hospital he takes so much pride in will be around at least another five years. The new lease on life, though, didn't come without some hitches for the tiny facility with 25 patient beds, nine to 12 of which are occupied on a normal day.

Independent since it opened in 1950, Athol Memorial is set to enter a partnership with Vanguard Health Systems Inc., which operates a national chain of hospitals that includes St. Vincent Hospital in Worcester. It will maintain its emergency department and existing inpatient and outpatient services, as well as get $1 million in cash and a promised $2.5 million for capital improvements to, hopefully, make it more economically viable.

The very fact that Athol Memorial is still around today surprises many who follow the health care industry in Massachusetts. In a field dominated by what a recent report from state Attorney General Martha Coakley's office terms "haves and have nots," the Athol hospital is at the very bottom of the latter.

That report, "Examination of Health Care Cost Trends and Cost Drivers," has drawn little attention among the public, but has stirred nonstop discussion among health insurers, hospital administrators, doctors and others associated with the health care industry in this state. It makes a convincing case that health care in Massachusetts, the model for much of the new federal health care law, is riddled with inequities and serious problems.

The quality of health care in the Bay State, ranked at or near the top by most quality measures, and access to it are not at issue. But the network of insurers, hospitals and doctors that pay for, administer and deliver that care has been rendered "dysfunctional" and fueled spiraling costs "that we all agree are unsustainable," Ms. Coakley said in an interview.

It's a definite matter of concern for Massachusetts residents who already pay the highest family health insurance premiums in the country, according to the Commonwealth Fund, a nonprofit health care foundation. Moreover, per capita spending on health care in the Bay State already was 54 percent higher than the rest of the country in 2007, according to the state's Division of Health Care Policy and Finance, and left unchecked, health care costs could exceed one-third of an average Bay State family's...