OCR Text |
Show Why Are Hospital Costs So High? Foundation Tries to Find Answers The average one-day hospital stay in Utah in 1979 cost $66 to $366. That doesn't mean the least costly hospital had the most efficient operation nor that the highest-priced flagrantly overcharged its customers, said Adjusted Utah inpatient hospital charges nnul Calendar calendar wear year 1 1979 070 incfa 1976-80 No. of Charge Charges Charge Charge bed dry adm. day adrn. Smalt rural Allen Memorial 38 $206 $768 21.74 18.09 Bear River 20 236 792 22.50 14.37 Beaver 20 191 798 12.87 10.16 Duchesne 32 219 782 13.59 8.58 Fillmore 22 212 846 25.06 22.66 Garfield 20 229 911 17.05 14.63 Gunnison 21 166 609 13.07 11.03 Juab 31 215 883 30.5e 54 85 Kane 20 182 630 25.36 28.49 Milford Valley 14 180 755 10.27 6.57 Monument Valley 27 168 1058 10.74 16.36 San Juan 36 186 647 20.30 16.47 Sanpete 25 181 639 18.35 15.75 Sevier 28 215 765 16 00 16.36 Summit 14 155 865 27.77 29.94 Tooele 38 184 889 26.48 22.40 Uintah 31 205 553 14.65 21.45 Wasatch 25 214 805 17.30 15.36 West Millard 16 196 616 36.58 27.36 Average 25 198 728 18.67 18.11 Large rural BrighamCity 50 289 972 19 59 24.69 Castleview 70 210 973 24 61 20.44 Dixie 65 258 1110 13 00 14.90 Logan 126 225 822 18.24 18.28 Valley View 56 231 915 17.26 16.11 Average 73 236 925 18.36 18.39 Small urban American Fork 82 201 855 1 8.08 1 7.24 Davis North 100 293 1129 12.94 10.87 Lakeview 128 261 1148 16.14 29 12 Mountain View 91 239 1090 28 88 24.92 St. Benedict's 133 236 1452 15 64 17.60 Valley West 97 230 1024 12.43 9 84 Average 105 243 1141 16.49 17.88 Large urban Cottonwood 243 251 1171 13 60 17.84 Holy Cross 343 284 1393 18 61 13 54 LDS 570 336 1.986 16 44 16.29 McKay-Dee 360 271 1440 20.18 18.62 Primary Children's 154 372 2755 23 05 36.37 St. Mark's 306 232 1339 13 47 12.07 University 310 333 2604 1712 16.22 Utah Valley 389 254 1238 17 76 18.15 Average 334 288 1572 17.22 17.03 Note. Increases in charges may reflect changes in price, mix, intensity and quantity of services - accordingly, caution should be exercised in interpreting the data Because of differences in case mix. caution should also be exercised in any arterr.pt to compare charges among hospitals. Charges are adiusted to include any state or local subsidy and to exclude expenses attnbutable to hospital basod physicians Annual increases for Oavis North are for 1977-1980 Asterisk indicates tiospital has substantial teaching prorim Source Medicare Cost Reports, 1976-80 I John Billings, director of the Utah Health Cost Management Foundation. The foundation has developed an extensive profile of hospital and physician costs in the United States and Utah in an effort to pinpoint factors that are contributing to rising health care costs. Until about four years ago, Utah had an enviable position among its sister states, having hospital costs near the bottom range. That advantage still exists, but is disappearing under the effect of percantage increases in the state that have exceeded national averages over the four-year period. One explanation for the increasing costs in Utah is an area of great expansion for the industry. Many health care facilities are enlarging, rebuilding or adding equipment. Whether the big-capital spending binge has been more than necessary is one of the questions the foundation will study. In 1955, Americans spent 4.4 percent of the gross national product lor health care. By 1980, the percentage had reached 9 percent, and there as no indication of a reversal. As the largest consumer of health care services (through Medicare and Medicaid and related programs) the federal government has become concerned, alone with leaders of business, industry and consumers. The money that goes into health care is, of necessity, being taken from other budget areas including education, military, social and others. "... a major national debate appears to be growing as to the most effective means for control of health care costs (regulation vs. stimulation of market forces)" a preface to the foundation's profile says. The Utah Health Cost Management Foundation Inc. was established under a three-year grant from the John A. Hartford Foundation to experiment with the theory that competition among health care providers and insurers is a possible solution to escalation. Now in its second year, the Utah foundation is examining all aspects of health care delivery and cost to ferret out weaknesses and identify strengths. The profile of costs is the first step in analyzing the present-status, Billings said. Since a multitude of factors influence medical costs, he said, making comparisons is very difficult. A small, publicly owned hospital that serves the primary needs of a community, for instance, cannot possibly compare with the large Wasatch Front facility that serves critically ill patients. Other factors that affect a hospital's costs include the service area's population mix (old people and the socially and economically deprived tend to use more medical services), whether the area is agricultural or industrialized, if the birth rate is high or low, the income of residents and education levels. There are many tm variables. Who" a hospital expands and has considerable capital outlay, that cost is passed on to consumers. When the costs of salaries and of supplies go up, the consumer pays. In general, Utahns are healthier than their counterparts in other states. The state has a younger population (one of the youngest in the nation), (Continued on I'age 8) Comparison of Medicare prevailing charges for selected physician services j 1978 ! us UUft average Initial limited office vsit(QP) $ 5 $ 22 Initial limited office visit (specialist) 30 30 I Routine urinalysis 4 5 Complele Wood count 8 9 , 12 Chemistry tost 14 '7 j CnestX-ray 17 18 EKQ 24 23 CAT scan 225 '95 I Radiation therapy i (Low Volt) 40 21 Appendectomy 280 378 ' Hystereoorny 540 687 ! Open reduction 0' j fracture 600 797 Cardiac catheter jation 318 412 Note u S average unwwgnted average of prevailing (barges from all 'evOrtuH dittictj Source Meov-aia ttYv rA P'iva"g Charge Heauh Care Fmanoog ajriwaslraliun Put) No 1000' 16-791 I 1 Why Are Hospital Costs So High? Foundation Tries to Find Answers (Continued from Page 1) which means less demand on health services. The elderly use a comparatively large proportion of health care, with some of the greatest expenditures coming in the last period of life. A generally healthful lifestyle also keeps Utahns out of hospitals, compared with residents of other states. "Shopping" for the least costly medical services is virtually unheard of, either in Utah or elsewhere, and is unlikely even if consumers were to have access to comparative prices. Convenience, one of the first considerations, would still keep people in their neighborhoods for care whenever possible. Even along the more densely populated Wasatch Front, with" a choice of hospitals, people don't compare and choose a lower-priced facility. They go where their doctors tell them to, in the vast majority of cases. In the long run, Americans worry little about health care costs, the report says. Third-party payers insurance companies and government health programs pick up the tab for 91 cent of Utah's residents. Patients are shielded from the impact of their health care bills. By most measures, Utah's availability of health care resources, their utilization and costs compare favorably with the nation and with the Mountain West, the foundation profile shows. The state has fewer hospital beds in ratio to population 2.9 per 1,000, compared with 3.7 in the region and 4.4 nationally. Beds cost money. If they are empty, those who use the facilities still pay for them. Utahns are admitted to the hospital at a slightly higher rate than elsewhere in the region (141 compared with 138 per 1,000) but they spend less time in the hospital (5.13 days, compared with 6.50). So the final figure, patient days per 1,000, is lower, with Utah's figure 721 and the region 898. Both state and region tally lower than the national rate of 156 admissions per 1,000, an average 7.56-day stay and 1,180 patient days per 1,000. The number of physicians serving a community affects consumer costs. Utah has traditionally had fewer doctors per 100,000 population than is reported nationally. In recent years, however, the Salt Lake area supply of doctors has very slightly exceeded the national average. Rural Utah, however, continues to have some shortages in physicians. A profile of the medical profession shows Utah with more specialists in proportion to general practitioners than is the norm elsewhere in the country. Nationally, there is concern that too many new physicians are entering the field each year. Cutbacks in some medical school supports and student loans reflect that concern. A comparison of average Medicare prevailing charges for selected serves shows Utahns generally paying less, with a few exceptions. Computerized axial tomography scans cost more in Utah, at $225, compared with $185 nationally That may suggest an oversupply of CAT scanners in the state, Billings said. Low-voltage radiation therapy also costs more $40 per treatment, compared with $21 nationally. An electrocardiogram in Utah costs $24, just $1 more than the national average. For other medical services in the survey, however, Utah compares well. The comparisons, with Utah first and the national figure second, include: initial office visit to a general practitioner, $15-22; initial office visit to a specialist, $30-30; routine urinalysis, $4-5; complete blood count, $8-9; 12-chemistry test, $14-17; chest X-ray, $17-18; appendectomy, $280-378; hysterectomy, $540-687; open reduction of fracture, $600-797; cardiac catheterization, $318-412. Indicative of Utah's changing health cost scene is a review of Medicare reimbursement. In 1976, the average reimbursement per beneficiary was $321 in Utah, $442 in the region and $500 for the nation. By 1979, the fugures were $514, $602 and $686. Utah's 17 percent increase compared with 10.9 for the region and 11. 1 for the country. The state's increased costs also have outstripd the increases in per capita income, the profile shows. From 1976 to 1980, per capita income rose 9.2 percent and hospitals costs rose 15.2 percent. At individual hospitals, average increases during that four-year period ranged from 10.27 (at Milford Valley) to 30.58 (at Juab). In the profile, hospitals are grouped into categories: small rural, large rural, small urban and large urban. For the small rural hospitals the average increase over the period was 18.67; for large rural hospitals, 18.36 small urban hospitals, 16.49; and large urban, 17.22. The profile also looks at hospital charge increases in relationship to the hospital's affiliation with a multi-hospital system. In recent, affiliation with a larger system has become a near-norm, not only in Utah but throughout the country. The multi-hospital groupings offer hospitals savings in purchases, insurance, construction and other costs. In 1979, the average per day increase for hospitals associated with Advanced Health Systems (for profit) management system was 68.5 percent; for those associated with Hospital Corporation of America (for profit), 15,7 percent; Humana (for profit) 13.1 percent; and Intermountain Health Care Inc. (non-profit) 15.1 percent. The first couple of years after a hospital joins a larger system are typically marked by large expenditures in a "catch-up" or construction phase. Billings said. Typically, the hospital has been sold or put under a management contract because its public sponsor usually a county or city is losing money and is unable to operate the facilty economically. Increasing personnel costs are contributing to higher hospital bills. Utah facilities have traditionally paid wages below the national scale and for the past few years have made larger-than-national increases to help bring their employees to par. From 1969 to 1976. Utah's annual increase average was 8 percent and the nation's 8.3 From 1976 to 1979, Utah salaries increased 9.2 percent and the nation's 7.6. Since personnel costs represent approximately 70 percent of a hospital's expenses, those stflHsHrs sav snmpthinff nhnnt rising hospital costs. Even though they are relatively 'isolated from the effects of rising hospital costs, Utahns are paying more for the insurance that provides the buffer. The annual increase in premium charges among Utah's largest insurers has ranged from 14.6 percent to 19.8 percent. Tax loads have gone up to support Medicare and Medicaid. As the foundation continues its work, comparisons will be studied in more detail and attempts will be made to sort out the underlying factors that contribute to health care costs. If possible, the foundation then will attempt to inject competition by creating pressures that will help the health care industry put on its own brakes. |