Tag Archives: . health care spending

Prices charged by NYC area hospitals vary widely, new report says

In the New York City area, hospitals with the biggest market share tend to charge the highest prices, according to a new report from the New York State Health Foundation.

The report, prepared by Marlborough, Mass.-based Gorman Actuarial, studied pricing in three regions of the state. In downstate New York, the highest-priced facilities negotiated prices with insurers that were 2.2 to 2.7 times more than what the lowest-priced hospitals fetched.

Facilities that are part of New York-Presbyterian, Northwell Health and Montefiore Health System were consistently among the highest-priced facilities, while NYC Health + Hospitals’ facilities were all in the two lowest-priced tiers, according to the report.

The report also found that safety-net hospitals that rely mostly on Medicare and Medicaid for revenue tended to receive lower reimbursements from commercial insurers as compared with hospitals that treat few publicly insured patients.

The study’s authors received unprecedented access to contracts between hospitals and insurance companies, granted by the state Department of Financial Services, which regulates insurers. They described the hospital industry as one where higher prices don’t necessarily translate into higher-quality care, and complex contracts may hinder insurers’ ability to hold down health care spending.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary

U.S. Health Care Spending Capped

U.S. health care spending grew 3.6% in 2013, capping a five-year stretch of historically low growth, the Centers for Medicare and Medicaid Services said in December.

That’s good news for health care payers, but is the slowdown — which was the smallest increase since 1960 — sustainable?

What we’re seeing is “a slowing down of what was perhaps unsustainable” increases in the cost of health care, said Elise Gould, senior economist and director of health policy research at the Economic Policy Institute, a Washington-based think tank.

Health care spending rose at or below 4.1% per year from 2009 through 2013, CMS reported in the journal Health Affairs in December. That’s a far cry from the double-digit spikes of the late 1980s and early 1990s and the high-single-digit increases of the early 2000s.

Still, increases in health care spending outpaced the U.S. inflation rate of 1.3% for the 12 months that ended in November.

“We’ve talked about it being a new normal, that the days of double-digit inflation are unlikely to return soon” for health care prices, said Mike Thompson, New York-based principal and health care practice leader at PricewaterhouseCoopers L.L.P.

Mr. Thompson said the growing consumerism movement, hastened by the Patient Protection and Affordable Care Act’s upcoming 2018 excise tax on high-cost health plans, will factor into controlling future health spending.

Charles Roehrig, vice president and director of the Center for Sustainable Health Spending, a research arm of Ann Arbor, Michigan-based nonprofit health care consultant Altarum Institute, said sluggish growth in health care prices and other effects of the recession were key contributors to the five-year slowdown in health care spending.

He noted that the ACA’s productivity adjustment factor to ratchet down Medicare payment rates to hospitals is having a wider effect because commercial payers are following Medicare’s lead and negotiating lower rates, too.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary

 

 

Decrease in Health Care Spending Leads to Shrinking Deficit

Conventional wisdom in Washington surrounding health care spending has been doom and gloom — the solvency of federally mandated programs like Medicare and Medicaid has even been brought into question. The pace of growth in costs seemed unsustainable, with projected payouts threatening to strain an already worrisome federal budget deficit.

But it appears there’s a welcomed break in the trendline. Ever since the end of the Great Recession in 2009, the deficit has been shrinking and one reason is an unexpected slowdown in the pace of health care spending, which is the size of about 18 percent of the economy.

This is promising news for those who point to spending in the category as a major culprit for runaway budget deficits. Though experts debate the cause of the slowdown — could it be improved efficiency within the medical industry, the after-effects of the economic downturn or simply that younger Medicare enrollees are healthier than prior generations? — the trend has provided some overall relief to the federal budget.

Health care costs appear not to be budget-breaking as they once were believed to be, though the waves of aging baby boomers and the growing share of Americans covered under the Affordable Care Act will still drive federal health care spending in the long term.

There’s little doubt the punishing economic clump damped demand for health care services in general, and the fact that it hasn’t picked up could reflect the still-soft economic environment since the most recent downturn that lasted from December 2007 to June 2009, according to a recent report from the Brookings Institution.

But whatever the reason, it’s been a sigh of relief for Washington’s budget wonks and it’s even got politicians in both parties thinking how they might need to recast the message that entitlement spending is the root of all evil.

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Jeffrey R. Ungvary President

Jeffrey R. Ungvary