San Diego Union-Tribune Examines Trend of Increased Hospital Rates
The San Diego Union-Tribune today examines the increased cost of hospital stays in the state. In California, a hospital stay cost $1,523 per day in 2001, a 20% increase from $1,268 per day in 1997. Hospital rates nationwide have risen so steeply that they have overtaken prescription drugs as the primary cause of medical inflation, accounting for nearly half of last year's 8.7% rise in health care costs. Factors that have contributed to the rise in hospital costs include increased use of emergency rooms by the uninsured and hospitals' efforts to comply with the Health Insurance Portability and Accountability Act, which is expected to cost "tens of billions" of dollars. In California, new seismic retrofitting standards, which are expected to cost hospitals a combined $24 billion, also have contributed to the problem. According to the Union-Tribune, health plans are finding it a challenge to rein in hospital costs. "[Insurers are] having a very difficult time, given the increased strength of the hospitals," Walter Zelman, president of the California Association of Health Plans, said. For the first time since the early 1990s, when managed care was thought to be the "silver bullet" that would control health costs, hospitals have greater leverage in dealing with managed care plans because of consolidation within the hospital industry, the Union-Tribune reports. In the 1990s, managed care plans believed hospitals to be "bloated operations" that drove up health costs and thus reduced hospital payments to the facilities. However, hospitals' bargaining power has been strengthened by recent consolidations, which have left most communities with only one or two "dominant" hospital systems and a "backlash against the perceived excesses of health plans" has strengthened hospitals' bargaining power with health plans (Fong, San Diego Union-Tribune, 7/31).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.