Worcester Business Journal

wbjournal.com | October 28, 2019 | Worcester Business Journal 37 Outsiders have Worcester trending up Online shopping tools won't fix health care V I E W P O I N T E D I T O R I A L I n October, two of the three tallest buildings in Worcester, a couple blocks from each other on Main Street, were sold to investors from Boston and Los Angeles, indicating the growing level of interest in the market from outside the region will continue for the foreseeable future. First, the 24-story Sky Mark Tower on Main Street – the tallest residential building in the city – sold for $28.8 million to Los Angeles-based real estate investment firm Benedict Canyon Equities, which was founded by Bob Hart, a 1979 graduate of Worcester Polytechnic Institute. e sale price boils down to about $140,000 for each of the building's 206 apartments, which is a far cry from what the Greater Boston market fetches per unit. e relatively low price probably speaks more toward the need for upgrades in the building, which was built in 1990, than it does the capacity to achieve solid rental rates and a reasonable return on investment. e fact Benedict Canyon spent $29 million when the city last assessed the Sky Mark Tower for $18 million shows Hart and his team believe the city's real estate market, especially its downtown properties, are trending up. Second, the 24-story glass office tower in downtown originally called the Shawmut Tower, but today known as the Worcester Plaza – tied for the tallest commercial building in the city – sold for $16.5 million on Oct. 10 to Boston real estate firm Synergy Investments. e building actually sold for considerably less than the last time it was purchased: for $21.5 million in 2000. Like the Sky W hen it comes to ensuring health care is a right and not a privilege, Massachusetts has paved the way. Our hospitals and doctors are world class, we were the first state with universal health insurance coverage, and our exchange is the model for the Affordable Care Act. But we have more to do to make sure every resident has access to affordable health care. Massachusetts families and small businesses are spending more on health care than ever. In 2018, total healthcare spending grew 3.1%, and the average monthly insurance premium is more than $500 per month. Increasingly, residents have high-deductible health plans, potentially paying thousands more out-of-pocket. In an October report from my office, we found two key initiatives put in place to control costs aren't doing enough for Massachusetts residents. First, despite a lot of fanfare, online pricing tools allowing patients to choose lower-cost providers by comparing the price of services from different doctors and hospitals just aren't having the hoped-for impact. Studies show most pa- tients look to their doctor to tell them which hospital, lab, or specialist to go to. And once patients reach their deductible and out-of-pocket maximum, there's no financial incentive to shop for the lowest-cost care. Very few people are using these online pricing websites, and the tools aren't having a significant impact on overall costs. is doesn't mean the tools aren't providing good information, but we simply can't rely on them to keep costs down. Second, we analyzed alternative payment arrangements, which are agreements between healthcare systems and health insurance companies to pay doctors and hospitals for keeping patients healthy and avoiding unnecessary, high- cost services (as opposed to traditional fee-for-service pay- ments). ese arrangements aren't controlling costs as well as they could because they're too complicated and patients frequently switch health plans. Our report concluded nearly half of patients switched health plans or products within a two-year period, making it difficult for the insurance com- panies, doctors and hospitals to work together to save costs. Over the last five years, inpatient spending has fallen at lower-priced hospitals and risen at higher-priced ones, even though policymakers have tried to encourage patients and doctors to choose quality, affordable healthcare services. Bottom line: We can do more. While price transparency for consumers is essential, we must get serious about estab- lishing real incentives for high-quality, low-cost care. We should encourage patients to select primary care pro- viders who keep costs down; take a close look at the incen- tives for healthcare providers to direct patients to lower-cost settings; and acknowledge that doctors and hospitals want to keep patients in their own systems, even if that means not referring patients to high-quality, lower-priced competitors. Minor financial incentives won't overcome this reality. Together, we can get to the accessible and affordable healthcare system our state, our businesses and our residents deserve. Maura Healey is the Massachusetts attorney general. BY MAURA HEALEY Special to the Worcester Business Journal Mark, the price is indicative of its need for costly upgrades. Still, Synergy's choice of a prominent downtown office building to invest in, and its apparent interest in other Worcester properties inside the city's federal Opportunity Zone qualifying it for significant tax incentives clearly suggests the highly regarded Boston firm sees significant economic potential in the Worcester market. While neither property is a new development, new ownership brings the promise of investment and significant improvements to these important properties. Of course, neither Benedict Canyon nor Synergy were the first outside investors in downtown Worcester real estate. e current wave really kicked off in 2015 when Chip Norton and his Franklin Realty Advisors in Wellesley bought 100 & 120 Front St. – also tied for the tallest commercial building in Worcester – for $33 million, with an additional $36 million invested in upgrades to the rebranded Mercantile Center. While local developers investing in new projects remain a key cog in the region's growth, the level of outside investment is an important indicator of positive momentum. e more investors the city can attract, the more competitive the development scene becomes, and the more confident all developers are investing where value is strong and opportunity still abundant. Worcester hasn't had this level of investment in its downtown in a long, long time, and it's a welcome trend showing no signs of slowing down. The Worcester Business Journal welcomes letters to the editor and commentary submissions. Please send submissions to Brad Kane, editor, at bkane@wbjournal.com. Maura Healey W A T H O U SA N D WO R D S B Y D O N L A N D G R E N W

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