Analysis Shows Costs Continuing To Increase at California Hospitals

Hospital costs in California have been increasing for years, but the higher rates do not always result in higher quality of care, Kaiser Health News reports.

Over the last five years, the cost of a hospital stay for privately insured patients in California has risen by an average of 8.5% annually, according to state records. The cost of outpatient visits has risen by 9.6% annually.

Quality of Care

Quality measures for some prominent hospitals in the San Francisco area -- which has some of the highest hospital costs in the state -- revealed that some hospitals with less expensive rates performed certain duties more efficiently.

For example, some of the less costly facilities were better able to avoid infections and had lower death rates for intensive care patients.  

Trend in Higher Prices

In the past decade, hospital prices nationwide have increased by 4.9% on average each year for individuals with private insurance, according to data from the federal Bureau of Labor Statistics.

Meanwhile, between 2005 and 2009, California premiums for employer-sponsored insurance grew by 4.6% annually on average, according to the federal Medical Expenditure Panel Survey.

Reasons for High Costs

Hospitals often are able to charge higher prices because their large sizes or reputations give them influence during negotiations with health insurers, researchers say.

Also, California mandates that HMOs provide "adequate networks" to consumers, offering all major specialties near patients' homes.

In addition, many hospitals provide no-cost care to patients who have lost their jobs and have to make up for reduced payments from government health care programs like Medicare and Medi-Cal, California's Medicaid program.

Hospitals Respond

Hospital officials maintain that their hospitals have fair rates. They say that if employers who provide their workers with health insurance think rates are expensive, they can look for another health care provider.

However, few employers want to restrict their employees' plans to cover costs only at less costly facilities.

Hospital executives say that attracting the most talented physicians and nurses, as well as updating equipment, also drives up costs (Rau, Kaiser Health News, 10/18).