Transcript Controlling Health Costs Program Plan November 19, 2013

Some Observations on Controlling Hospital
and Health Care Spending
Stuart Guterman
Vice President, Medicare and Cost Control
The Commonwealth Fund
UMBC Public Policy Forum:
Controlling Hospital and Health Care Spending in the
Era of Budget Caps
Baltimore, MD
December 5, 2014
Hospitals’ Share of National Health Care Spending Has Decreased:
Share of National Health Expenditures (NHE) by Type of Service,
1983 and 2013
Share of NHE
50
45
40
35
39
32
30
25
19
20
20
15 15
15
9
10
7
7
6
5
8
8
5
5
1
3
0
Hospital
Physician and
Clinical
Dental and
Other
Professional
Nursing Care
Home Health
Facilities and
Care
Continuing Care
Retirement
Communities
Source: Centers for Medicare and Medicaid Services, Office of the Actuary.
Prescription
Drug
Other Personal Other National
Health Care
Health
Expenditures Expenditures
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Nonetheless, Hospital Spending Has Grown Rapidly:
Cumulative Change in Real Hospital and
Total National Health Expenditures, 1983-2013
250
200
238%
Real annual increase, 1983-2013 in:
Hospital spending
3.5%
Total health spending
4.1%
177%
Total
150
100
Hospital
50
0
Source: Centers for Medicare and Medicaid Services, Office of the Actuary.
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Hospitals Still Account for the Biggest Part of Health Spending Growth:
Contribution to NHE Increase by Category, 1983-2012
Other National
Health
Expenditures
15%
Other Personal
Health Care
9%
Hospital
31%
Prescription Drug
10%
Home Health Care
3%
Nursing Care
Facilities, etc.
5%
Dental and Other
Professional
7%
Source: Centers for Medicare and Medicaid Services, Office of the Actuary.
Physician and
Clinical
20%
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Nationwide, There Is Wide Variation in Hospital Payments by Payer:
Payment to Cost Ratios by Payer Category, 1988-2012
Community Hospitals Nationwide
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
Medicare
0.60
Medicaid
Private
0.50
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: Commonwealth Fund analysis of data from American Hospital Association Trendwatch Chartbook 2014.
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The Relationships Between Payment and Costs Also Vary Widely:
Medicare Payment to Cost Ratio and Cost Increase, 1988-2012
Community Hospitals Nationwide
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
Medicare P/C ratio
0.60
Cost increase index
0.50
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: Commonwealth Fund analysis of data from American Hospital Association Trendwatch Chartbook 2014.
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The Relationships Between Payment and Costs Also Vary Widely:
Private Payment to Cost Ratio and Cost Increase, 1988-2012
Community Hospitals Nationwide
1.50
1.40
1.30
1.20
1.10
1.00
0.90
0.80
0.70
Private P/C ratio
0.60
Cost increase index
0.50
1988
1990
1992
1994
1996
1998
2000
2002
2004
2006
2008
2010
2012
Source: Commonwealth Fund analysis of data from American Hospital Association Trendwatch Chartbook 2014.
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The Flows of Payments and Costs Vary Widely Over Time:
Annual Rates of Increase in Hospital Costs per Case and Medicare,
Medicaid, and Private Payment Rates, 1988-2012
1500%
10.6
1000%
Costs per case
Medicare pmt. rates
Medicaid pmt. rates
Private pmt. rates
9.3
7.8
7.4
6.8
6.3
4.9
3.8
500%
2.6
1.2
4.1
2.0
3.5
3.5
2.0
0%
-0.5
-500%
1988-1993
1993-2000
2000-2008
2008-2012
Source: Commonwealth Fund analysis of data from American Hospital Association Trendwatch Chartbook 2014.
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