Going on the offensive, the national Blue Cross and Blue Shield Association apparently has caught the American Hospital Association off guard with a new initiative that examines hospitals' culpability for rising healthcare costs, Modern Healthcare has learned.
The Chicago-based Blues, which represents the nation's 44 Blues plans, has commissioned leading healthcare economists from the Harvard School of Public Health to draft a detailed report on the factors driving escalating hospital costs.
The report, which is scheduled for release in mid-April, will analyze several possible hospital-cost drivers, including unnecessary admissions, labor shortages, new technologies, degree of market competition and variations in hospital-system size. The results, Blues officials said, will be used to help find ways to regain control of national healthcare expenditures, which climbed 6.9% in 2000, the largest jump in a decade (Jan. 14, p. 12).
The AHA, also based in Chicago, was surprised by news of the report.
"This is the first time we've heard of it," AHA spokeswoman Amy Lee said in response to an inquiry by Modern Healthcare. She declined to comment further.
The Blues association isn't the first to scrutinize hospitals' role in healthcare cost inflation.
According to a report released last September by the Center for Studying Health System Change, hospital spending accounted for the largest share of increased healthcare costs in 2000, or about 43%.
Meanwhile, the usual suspect-drug spending-accounted for just 29% of the rise, down substantially from 41% in 1999, the study found.
"The focus, until now, has been mainly on pharmacy costs," said Scott Serota, the Blues association's president and chief executive officer. "But growing evidence suggests that hospital costs are playing a bigger role than previously thought."
The Blues association's decision not to tip off the AHA about the report may signal a growing divide not only between insurers and providers in general, but also between two national organizations that have shared a long history.
The associations maintained formal ties from 1939 to 1972. In fact, it was the AHA's former director of hospital service, Rufus Rorem, who in the late 1930s began to shape the fast-growing number of hospital insurance plans that eventually came under the aegis of the Blue Cross and Blue Shield Association.
But in recent years, the associations have bumped heads on a number of political issues ranging from the availability of small-business insurance policies to Medicare regulations governing the solvency of HMOs vs. provider-sponsored organizations.
Serota stressed that the report is not intended to blame hospitals and is simply the starting point in a much broader healthcare cost-reduction initiative that the organization will kick off soon. As part of the multiyear effort, the association said it also will explore a gamut of other cost drivers, including the aging population, direct-to-consumer advertising, and the growing ranks of the uninsured.
"We're not pointing fingers at anyone," Serota said. "The first step in finding solutions is to fully understand the cause of the problem ... We will be looking at every aspect of it."
This week, the Blues association will release the results of a separate survey on what benefit managers perceive as the No. 1 culprit behind the nation's spiraling healthcare costs. According to preliminary results, about 64% of those surveyed considered increased pharmacy spending the main cost driver, while 33% blamed changing consumer expectations of care. The rest pointed equally to hospitals, doctors and health insurers.