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The Business of
Health Care Report
The Center for Studying Health System Change just announced its
analysis of health changes from the late nineties to the beginning of the new millennium. The study reports the biggest
jump in health care costs in the past decade with both consumers and health providers contributing to the increase. Here's some of the reasons for the increase. Managed care companies
have eased care restrictions to retain customers. A reduction in excess hospital bed capacity in hospitals have left
hospitals with a need to build and cover today's prices. And consumers have not eased their demand or need for hospital
services and are vocal about having access to extensive provider networks to retain their power of choice. Couple these market dynamics with the hospital and physician need to
be compensated fairly after years of low reimbursement for their services and the lid had to rise to meet marketplace
demand. According to the study, outpatient care comprised 37 percent of the
overall cost increase, up 16 percent in a single year. Much of this increase is due to a shift from inpatient to
outpatient care and the need for providers to upgrade their equipment to newer technology, thereby increasing
prices. Inpatient care accounted for 10 percent of the overall increase,
driven by higher labor costs and investments in facilities to keep pace with standards and patient demands. Physician services accounted for 25 percent of the overall cost
increases, down 8 percent since 1999. Prescription drugs stabilized somewhat after comprising 41 percent of the
cost increases from 1998 to 1999. Payroll was a key driver of the overall cost increases, with all
health labor climbing 4.7 percent in 2000. The impact was even greater for hospitals, whose payroll costs rose
7.6 percent. Where technology and labor are involved, future predictions are
that heavy investment will be required to serve the needs of consumers in health care. For Texas Health Resources
and its family of hospitals - Harris Methodist Hospitals, Presbyterian
Healthcare System and Arlington Memorial Hospital - I'm CEO Doug
Hawthorne with "The Business of Health Care Report" on NewsRadio
1080 KRLD.
©
2002 Texas Health Resources |
I'm Doug Hawthorne, President and CEO of Texas Health Resources, with
"The Business of Health Care Report" on 