A new study for the Blue Cross and Blue Shield Association, Chicago, points to hospital consolidation and an explosion in medical technology as the main drivers behind U.S. healthcare spending growth, which at 10% last year was the highest in more than a decade. A similar study released last month by the Center for Studying Health System Change, Washington, found that hospital spending increased 12% in 2001 and represented a 51% share of overall healthcare spending growth. According to the study for the Blues association, inpatient spending grew an average of 5.9% annually from 1998 to 2001, roughly twice the rate of inflation, and accounted for 34% of overall healthcare cost inflation. Hospitals' increased use of medical technology generated 19% of new inpatient spending and hospital consolidation accounted for 18%, the study found. Spending on hospital outpatient care grew at an average rate of 12.1% from 1991 to 2002, second only to prescription drugs in overall growth. Hospital consolidation was the larger factor in outpatient spending growth, accounting for 35% of the increase, while medical technology made up 18% of the increase.
The study is part of a multiyear research initiative by the Blues association and was conducted by researchers at the University of Southern California, the Lewin Group and HealthShare Technology. It also examined the effects of several other factors on cost growth, including the nursing shortage, state regulations and consumer income levels. Carmela Coyle, senior vice president for policy at the American Hospital Association, called the study's findings "distorted" and "misleading." She said its results were released at a time when insurers are enjoying record profits and face growing criticism for raising premiums. Look in next week's Modern Healthcare for an analysis of the issues. -- by Laura B. Benko