Hospitals are keeping costs low, says survey
Virtual halt in Medicare growth may not last
According to the latest annual survey by the American Hospital Association (AHA) in Chicago, hospitals and health systems still are keeping costs low. The survey shows that for the third year in a row, there has been little or no growth in hospital costs. In 1997, growth in both inpatient and outpatient hospital costs (total adjusted expense per admission) was 0.6%; five years ago, growth was about 8%. (See chart at right.)
Medicare spending rose in 1998 by just 1.5%, the smallest increase since the beginning of the program in 1965. In the last decade, Medicare spending rose by an average of $12.8 billion annually, or 10% a year. But in 1998, it grew just $3.1 billion, to a total of $213.6 billion.
"It’s unclear how long this trend can continue," stated Dick Davidson, AHA president. "With the resources needed to meet the Year 2000 technology challenges and skyrocketing drug prices, keeping costs low will become more difficult." Hospitals, facing pressures from increased competition and managed care, have just begun to feel the impact of Congress’ five-year $44 billion payment reduction, which started last year. The Medicare Payment Advisory Commission says Medicare payments to hospitals will drop from 90 cents per dollar of outpatient care before enactment of the Balanced Budget Act to 78 cents after it.
The AHA survey also suggests:
• A major focus of almost all hospitals is community wellness.
• The average length of stay for patients continues to drop, declining last year to an all-time low of 6.1 days.
• Outpatient visits continue to climb. Over the past five years, they increased about 29%. During the same period, overall inpatient days dropped 13%.
• The number of full-time equivalent personnel employed by community hospitals increased to 3.79 million.
• About 23% of hospitals were involved in developing an HMO product during the year, up from 19% three years earlier.
[Editor’s note: To obtain a copy of "Hospital Statistics," the AHA survey report, call the AHA at (800) 821-2039.
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