One of the main drivers of health care cost inflation is hospital expense. New information reported in the Detroit News reveals that despite layoffs, a dramatic increase in uncompensated care, and flat inpatient admissions, hospitals throughout the Detroit metro area enjoyed a very profitable 2005. Meanwhile, Sutter Health, the big hospital/health care company on the West Coast, also reported increased profits – $442 million on revenues of $6.7 billion.
The good financials are a result of aggressive cost cutting, an influx of sicker patients requiring more services, and increased reimbursement from private payers.
One item of interest is the huge growth in uncompensated care. According to the News, “uncompensated care reported by the region’s major health systems rose to about $740 million in 2005, up $163 million from 2004.”
My bet is that this rapid growth is due in large part to big increases in billed charges, and not necessarily to more services provided to more folks without insurance. The growth in billed charges is rampant throughout the US, as hospitals seek to offset their “losses” on uncompensated care by cost-shifting to other payers.
What does this mean for you?
If I was in the commercial insurance business I’d watch my hospital expenses really really carefully.
Apr
16
