Hospital Costs are Surging With No Solution in Sight

Hospital charges represent about a third of the $2.7 trillion annual United States health care bill, the biggest single segment, according to government statistics, and are the largest driver of medical inflation, a new study in The Journal of the American  Medical Association found. Elisabeth Rosenthal says, "A day spent as an inpatient at an American hospital costs on average more than $4,000, five times the charge in many other developed countries," according to the International Federation of Health Plans, a global network of health insurance industries.  Patients are not thinking about these costs while nurses clean and stitch their wound while they watch DVD's to pass the time.

Hospitals were never considered profit centers, until the last decade where they have became big moneymakers.  Costs have nearly doubled in California.  Hospitals are charging in excess of $3,000 for six stitches, this is a harsh reality for patients when they receive their bill in the mail.

Economists say the reason for high hospital costs is more fiscal rather than medical.  There is relatively no price regulation for hospitals, and they are also the most powerful entity in the healthcare industry.

One would think that with the rapid consolidation in the healthcare industry costs and overhead for hospitals should decrease, but that is only if they want to.  “There is a big flurry of consolidation and the effects depend on what the objective of the health care system is,” said Orry Jacobs of the health care consulting firm BDC Advisors. “If the intent is to improve care and bend cost curves, then networks can do so. If the objective is to corner the market and demand higher rates, then that will happen.”

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Image by Fabrizio Constantini via New York Times