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No End In Sight to Rising Healthcare Costs

Karen Minich-Pourshadi, for HealthLeaders Media, October 25, 2010

Last week, Moody’s released a report on hospital admissions. In what they describe as “an historical anomaly that isn’t likely to be reversed any time soon,” it seems that the rate of growth for patient admissions to not-for-profit hospitals is actually declining. They chalk this up to a bad economy. But that’s just a blanket term; it’s not really the economy, but the people who are affected by the economy—and these days they can’t afford to pay out of their pockets.

"Hospitals are largely reimbursed on a per-case basis by governmental and private payers, creating a direct link between all volume indicators and hospital financial performance," said Moody's Senior Vice President Lisa Goldstein, author of the report. That’s a fair and true statement, but it leaves something out. Unless the consumer goes to the hospital, then the payers don’t actually even get involved.

 
I don’t think that declining admissions will actually surprise any hospital CFO, but the findings are worth knowing. Here are a few highlights:

  • Since 1991, the rating agency found slower growth from one year to the next as the median growth rate declined to -0.02% in 2009 from 1.03% in 2008.
  • They predict the poor admissions rate trend will likely continue into 2011.
  • They also predict that admissions may become less important under a bundled payment system.
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5 comments on "No End In Sight to Rising Healthcare Costs"


chuck (10/26/2010 at 11:29 AM)
Let's get real[INVALID]you want to REALLY cut costs?? Do what all the other industrialized countries of the world have already done[INVALID]go to a SINGLE PAYER SYSTEM for EVERYONE. This reduces costs drastically by eliminating the 25% of costs that go to administrative waste and demands universal healthcare standards so outcomes are better. Single Payer also allows for preventive care to take precedence over medical care. Plus. sigle payer covers everyone[INVALID]1/6th of Americans will no longer be uninsured, costing us even more in the long run. Unfortunately in the US, so many people are making money off the current system that they don't really want it to change[INVALID]insurance companies, doctors, hospitals, etc., want the current system to stay in place so their profits won't be harmed. Of course, no one is really looking long-term when an inevitable system collapse will harm ALL profits. Little fixes like high deductible health plans, malpractice reform, etc., may make mild improvements to the system, but they're not stopping this runaway train. DRASTIC measures need to be taken if everyone is really serious about reducing spending for healthcare.

bob (10/26/2010 at 9:57 AM)
No knowledgeable analyst has ever expected health care costs to decrease during the next decade. Rather, the goal is to reduce the rate of increase. If the rate of increase will be reduced annually by just one per cent, that will make a tremendous difference in Medicare expenditures and everything else. Notice that S&P just reported that "looking across the family of S&P Healthcare Indices, we have seen a trend of moderation in the annual growth rates, particularly in the last 12 months. This is most prominent with Medicare claims costs. In November 2009 those costs were rising at an annual rate of 7.94%. With August's report we see that the rate has fallen to +5.08%. That is the big news. Spread the word!

bob (10/26/2010 at 9:42 AM)
No knowledgeable analyst has ever expected healthcare costs to stop rising in the decade ahead. The goal is to bend the cost curve and decrease the rate of increase. If the rate of increase goes down just one per cent annually during the decade, that will make a tremendous difference in Medicare expenditures and everything else. That is what is going on right now. Notice that S&P reports that "looking across the family of S&P Healthcare Indices, we have seen a trend of moderation in the annual growth rates, particularly in the last 12 months. This is most prominent with Medicare claims costs. In November 2009 those costs were rising at an annual rate of 7.94%. With August's report we see that the rate has fallen to +5.08%." That is the big news!