Supplies and Devices Are Biggest Cause of Hospital Cost Increases

Medical supplies and devices represented nearly one-fourth (24.2 percent) of rising hospital costs between 2001 and 2006, according to a new AHRQ-funded study. Among all types of hospital stays, the cost percentage impact for supplies and devices was nearly three times that of operating room services. While rising inpatient costs are typically associated with imaging services such as computed tomography scans and magnetic resonance imaging, those services only contributed a 3.3 percent increase in the cost of an average hospital stay, the study found. Because rising hospitals costs are an ongoing concern, payers and policymakers may want to explore the specific factors driving those costs and the factors associated with them, according to the study authors. The study, “What Hospital Inpatient Services Contributed the Most to the 2001 to 2006 Growth in the Cost per Case?,” was published online in Health Services Research on September 4. Select to access the abstract on PubMed.®

Health Serv Res. 2012 Oct;47(5):1814-35. doi: 10.1111/j.1475-6773.2012.01460.x. Epub 2012 Sep 4.

What hospital inpatient services contributed the most to the 2001-2006 growth in the cost per case?

Maeda JL, Raetzman SO, Friedman BS.

Source

Analytic Consulting & Research Services, Truven Health Analytics, Washington, DC.

Abstract

OBJECTIVE:

To demonstrate a refined cost-estimation method that converts detailed charges for inpatient stays into costs at the department level to enable analyses that can unravel the sources of rapid growth in inpatient costs.

DATA SOURCES:

Healthcare Cost and Utilization Project State Inpatient Databases and Medicare Cost Reports for all community, nonrehabilitation hospitals in nine states that reported detailed charges in 2001 and 2006 (n = 10,280,416 discharges).

STUDY DESIGN:

We examined the cost per discharge across all discharges and five subgroups (medical, surgical, congestive heart failure, septicemia, and osteoarthritis).

DATA COLLECTION/EXTRACTION METHODS:

We created cost-to-charge ratios (CCRs) for 13 cost-center or department-level buckets using the Medicare Cost Reports. We mapped service-code-level charges to a CCR with an internally developed crosswalk to estimate costs at the service-code level.

PRINCIPAL FINDINGS:

Supplies and devices were leading contributors (24.2 percent) to the increase in mean cost per discharge across all discharges. Intensive care unit and room and board (semiprivate) charges also substantially contributed (17.6 percent and 11.3 percent, respectively). Imaging and other advanced technological services were not major contributors (4.9 percent).

CONCLUSIONS:

Payers and policy makers may want to explore hospital stay costs that are rapidly rising to better understand their increases and effectiveness.
© Health Research and Educational Trust.