WASHINGTON – Spending on hospital services could top $1 trillion in 2008, based on estimated growth in hospital charges between 1997 and 2005.
Data also indicates that the growth in hospital charges over that time far outstripped the number of admissions, providing evidence that hospital inflation is rising rapidly.
The report, from the Healthcare Cost and Utilization Project sponsored by the Agency for Healthcare Research and Quality, only tabulates billing from inpatient stays and does not include hospital outpatient care, emergency care for patients not admitted to hospitals or physician fees related to the admissions.
Even so, the report found that the nation’s hospitals billed nearly $875 billion in total charges for inpatient hospitalizations, representing charges for 39.2 million hospital stays. Since 1997, when the national hospital bill was $462 billion, adjusted for inflation, hospital prices have risen 89 percent. By contrast, admissions increased from a base of 34.7 million in 1997, up 13 percent over those eight years.
The average yearly rate of increase over the eight-year period was 4.5 percent, and researchers Roxanne M. Andrews and Anne Elixhauser project that hospital billing could top $1 trillion next year if that rate remains constant.
The report found that Medicare paid the bulk of the national hospital bill in 2005, covering some $411 billion in expenses, while private insurance paid $272 billion in hospital charges and federal-state Medicaid programs paid $124 billion in bills. The report estimated uninsured hospital stays cost $39 billion, while various other payers covered an additional $28 billion.
The report is based on data from community hospitals, defined as short-term, non-federal, general and other hospitals, such as specialty facilities. Data is excluded from long-term care, rehabilitation, psychiatric and substance abuse facilities. Charges reflect the amount the hospital billed for the entire hospital stay; charges are generally more than the amount paid to the hospital because payers generally set maximum allowable rates or receive discounts through contracts with hospitals.
The report found that hospital bills for treating the 20 most expensive medical conditions totaled $450 billion in 2005, or 51.5 percent of all hospital billing for the year. In fact, the top six conditions – coronary artery disease, pregnancy and delivery, newborn infant care, acute myocardial infarction, congestive heart failure and pneumonia – cost about $217 billion to treat in hospitals, or 24.9 percent of all hospital bills.
The rate of spending on six conditions was at least 1.5 times greater than the 89 percent increase in all hospital billings from 1997 to 2005. These included sepsis treatment, up 189 percent; chest pain, up 181 percent; respiratory failure, up 171 percent; back pain, up 170 percent; osteoarthritis, up 165 percent; and irregular heartbeat, up 131 percent.
The American Hospital Association noted that the rising prices are influenced by many factors, including the demographics and increased severity of illness among the patients that hospitals treat.
“The cost of healthcare is only one part of the larger healthcare picture,” an AHA spokesperson said. “We need to look across the entire spectrum of healthcare and talk about how we can better manage the overall care process, manage the growing burden of chronic illness in our population and improve patient outcomes while controlling costs. Until these items are addressed, healthcare costs will continue to grow.”