RAND estimates of Massachusetts Cost Savings 2010-2020

Massachusetts' Division of Health Care Policy and Finance released a 244 page summary of RAND's evaluation of 21 initiatives which have been proposed to save health care costs. RAND started with 75 potential initiatives, narrowed this down to 21, and did literature reviews and developed projections based on optimistic and less optimistic scenarios for total savings possible over the 10 year period from 2010 to 2020 for Massachusetts health care excluding Medicare. The projections take into consideration the lead time required for many changes - and the results will surprise some.

1) The most impressive initiative would be effective bundling of payments. This could save as much as 5.9% of total costs
2) Three much-touted methods of saving money in health care showed estimates of increased costs with the less optimistic projection. This includes implementation of health information technology, disease management, and implementation of medical home.
3) Two of the initiatives, to decrease reimbursement to academic medical centers, are more applicable in Massachusetts than other areas with lower penetration of AMCs.
4) The RAND projections suggest middling to no savings from hospital rate regulation. Next month's Health Affairs will have a report from Maryland that might change this point of view.

RAND did not offer projections on 9 of the 21 initiatives - stating that either the literature was not promising in terms of cost savings or that there just wasnt' enough data.

In some ways - this is disappointing. Policymakers, insurers, providers, employers - pretty much everyone - wants a magic bullet. This set of projections suggests that payment reform should be part of the equation of efforts to manage health care costs. It also offers a well-referenced critical review of how difficult it will be to achieve meaningful cost savings.