Hospitals Drive Medicare Spending Increases

By | January 29, 2013

This facility fee is a windfall for hospitals, and it is perhaps the reason why hospitals are continually expanding their facilities. This continual expansion of facilities is one of the reasons that he United States has the most expensive healthcare system in the industrialized world, and not necessarily the best.

The healthcare industry often argues for cost shifting, maintaining that facility fees are used to offset other expenses. However, as our system is reformed, the income from these fees is not staying constant but actually increasing. As more physicians become employees of hospitals, then more outpatient services will be provided at these facilities, which will produce an ever-increasing cash trove for them, while raising the out-of-pocket costs of patients and draining Medicare’s financial reserves.

Ironically, one of the reasons given to justify mergers is that these developments will create a more efficient system and save costs. Yet the healthcare industry still has advocated to keep the ever-growing facility fee financial windfall that this integration creates.

The unrelenting rise in healthcare costs is due to a multitude of factors including overutilization of tests, medications, and procedures; the building of billion-dollar expansions of medical facilities; and the ever-increasing non-profit administrative salaries, which are approaching seven figures. In such an environment, it is not realistic to expect that monies saved or given will necessarily go toward improving healthcare quality.

The United States has the most expensive healthcare system in the world, spending over 50 percent more per capita than the next highest industrialized country, Norway, despite having a below average per capita number of hospital beds. The quality of our healthcare system is mediocre at best, with below average life expectancy and above average infant and maternal mortality rates as compared to Western Europe.

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It seems that the hospital industry thinks that health care is a growth industry. Healthcare costs are expeceted to reach 20% of GDP. Is this sustainable?