Updated Jan. 8, 2014 7:31 p.m. ET
BOSTON—More than a third of health-care spending may be wasteful in Massachusetts, where costs are among the highest in the nation, a state report released on Wednesday said.
Main drivers of excess spending included patients returning to hospitals for preventable reasons and emergency-room visits that better primary care could have warded off, the state's Health Policy Commission concluded, citing data from 2012. The commission estimated between $14.7 billion and $26.9 billion in wasteful spending that year, representing between 21% and 39% of total health expenditures.
The commission said the numbers were in line with waste at the national level, underscoring the challenges for a complex national health system that is stretching coverage to millions more people under the Affordable Care Act.
"Massachusetts has better overall health care quality performance and offers better access to care than many other states," the commission's report said. "However, considerable opportunities remain to further improve quality and access well as population health."
The commission also noted myriad efforts are under way aimed at trying to find and curb waste. For example, the federal Centers for Medicare and Medicaid Services launched a program in 2012 that penalizes hospitals for excess readmissions.
The Massachusetts commission was formed under a 2012 state law designed to control health-care costs by setting a target for growth in health spending and allowing penalties when providers exceed the target. The commission has an 11-member board from the public and private sector charged with restraining costs and making the system run more efficiently.
A report indicating how the state is tracking against those goals is expected by late this year.
Meanwhile, Wednesday's report helps frame the challenges in Massachusetts, which has long had pricey health care pegged to both higher usage of health services and higher prices. Indeed, the report said Massachusetts has the highest level of per capita health-care spending of any state, citing 2009 federal data. The report also noted the state's high-cost trends predate a landmark 2006 universal health coverage law that served as a model for the current federal law.
That state coverage-expanding law wasn't designed to restrain costs, making the 2012 law a key follow-up. It represents a particularly aggressive effort that will be closely monitored around the U.S., experts have said.
The Wednesday report sets a benchmark for how the Massachusetts health system is working while outlining some specific ways to improve, said David Cutler, one of the 11 commissioners and a Harvard University economics professor. Those improvements could include more cost and quality transparency; curbing waste by better coordinating patient care; and advancing alternative payment methods that reward efficient care, the report said.
The Massachusetts Hospital Association in a statement said local hospitals are already pursuing many of the strategies outlined in the report, "although more certainly can and will be done." The association also noted the report relies on a lot of data from 2009, preceding changes in the state's health-care payment and delivery system.
The association said there has been "ever-increasing emphasis" on things like paying for performance and quality improvement, while also noting light cost growth over a four-year stretch.
Indeed, health spending growth at the state and federal levels has been restrained in recent years, fueled in part by the severe recession and slow recovery. But "sustaining lower growth rates will require concerted effort," the state report said.
Along with cutting wasteful spending, the report also said the state can find savings through improved hospital operating efficiency and better managing patients with complex medical problems who represent an outsize percentage of health spending.
On the hospital front, the report said operating efficiency varies greatly from one hospital to another, with some high-cost hospitals delivering lower-quality care, and vice versa.
Write to Jon Kamp at jon.kamp@wsj.com
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