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Components of Hospital Cost Increases

By June 8, 2012Commentary

A new brief from the Agency for Healthcare Research and Quality focuses on why hospital inpatient spending has increased so much in the last few years.    (AHRQ Stat. Brief)   The brief looks at the years 1997 to 2009, for both elderly and non-elderly stays for 20 common procedures, with costs adjusted to be in constant 2009 dollars.  In 2009 there were 39.4 million stays, with an average duration of 4.6 days and an average cost of $9,200; compared to 1997, which had an average duration of 4.9 days and cost of $6,600, again adjust to remove the effects of inflation.  So the per day cost rose by over 40% in that time period.  Length of stay decreased most rapidly for elderly stays, consistent with Medicare’ payment incentives, but the per day cost rose more rapidly for these elderly patients.  Almost all of the increase in hospital spending is attributable to cost per day increases, with a modest effect of population growth.

For nonelderly patients, the highest costs were for stays associated with intubation and ventilation, spinal fusion and C-section, with the most rapidly growing costs associated with spinal fusion, blood transfusion, and knee arthroplasty.  For elderly patients, the high cost categories were related to intubation and ventilation, cardiac pacemaker procedures and knee procedures, with spinal fusion, blood transfusion and hemodialysis being the fastest growing.  For some of these categories, increases in stays per population were the major factor in spending growth and for others it was increase in intensity of services during the stay.  Length of stay had little impact, in fact, lessened spending for some categories.  While there is some definitional confusion, the data was revised to affect supposed actual cost of delivering the services, not charges.

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