Hospital costs are driving healthcare spending according to this article.

Hospital costs are driving healthcare spending according to this article.

If you live in the USA, you are no doubt affected by the healthcare premiums, deductibles and out of pocket costs associated with health insurance.   What is driving healthcare costs is often blamed on the cost of drugs, insurance carriers and hospitals.

With out of network coverage going away with private insurance and with many self insured plans, healthcare providers can no longer bill highly for their services and be out of network if they want to have successful practices.  Conversely, most insurers have not given their providers a raise in reimbursements in the last dozen years.   Perhaps, this is why so many providers have decided to sell their practices to hospitals which leads us to a recent article in Modern Healthcare.

According to Modern Healthcare (MH), we not only pay the highest costs of any nation for healthcare, but hospital systems which have become larger due to market forces such as insurance carriers predatory practices allowing them to raise their prices.

The largest driver according to MH are facility fees.  These are fees for just visiting the provider, or the ER which is affiliated with the hospital.   The provider then charges a fee on top of that.   These fees have been growing, along with the fees charged by other services offered by hospitals.   An unknown consequence of providers now working for hospitals is that they are obligated to refer back to these same expensive systems.  This means, rather than your provider sending you for a test to a lower cost facility, they are more likely to send you within their hospital system, feeding it.

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Hospital price growth driving healthcare spending

By Alex Kacik | February 4, 2019

Hospital prices are the main driver of U.S. healthcare spending inflation, and that trend should direct any policy changes going forward, according to a new study.

For inpatient care, hospital prices grew 42% from 2007 to 2014 while physician prices rose 18%, according to researchers who studied the Health Care Cost Institute’s claims data for people with employer-sponsored insurance from Aetna, Humana and UnitedHealthcare Group. Similarly, for hospital-based outpatient care, hospital prices increased 25% while physician prices grew 6%, the new Health Affairs study found.

Insurance costs a family of four about $19,000 a year. The reason costs vary so much across the country is because of the price of hospital care, which is the largest single component of healthcare costs in the U.S., said Zack Cooper, a study co-author and an associate professor of health policy at Yale University.

“What is most worrying to me is that there has been fairly profound consolidation among hospitals and when they gain market power they have the ability to raise prices,” he said. “They have the ability to gain more favorable contractual terms, which allows them to raise prices and resist the new, more sensible payment reforms.”

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