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The Cost of Hospital Care

Does anyone know what it costs to treat a patient in a hospital? Evidently very few do, according to a recent article in the New York Times1.

“Hospitals know what they are paid by insurers, but it bears little relationship to their costs.” Dr. Vivian Lee, CEO of University of Utah Health Care was determined to find out exactly what these costs were, and to use that data to reduce cost and improve care.

Resulting data revealed $0.82/minute is the cost for Emergency Room care and $12/minute for an orthopedic surgery case – finally bringing theory to fact. For every minute you can reduce an orthopedic operation, through use of technology or process, you save $12/minute. Product manufacturers can now use this information to perform cost benefit analyses and ROI calculations. Payors can use this data to incentivize efficiency.

Amazing, “studies have found that 20 percent to 50 percent of hospital lab tests were completely unnecessary, ordered by residents with no questions asked. Most insurers were paying a lump sum for patients’ treatment so the cost for extra tests was borne by the hospital.” The hospital pays the cost for this and ultimately the patient pays the price. “Patients were getting so many blood tests that some became anemic.”

Let’s take this a step further. If we now know the true cost for hospital care, would it be more cost effective or expensive to treat patients outside the hospital system? Would patient outcomes be improved or reduced? Several studies have shown the answer to be yes, more cost effective and yes, better patient outcomes.

A published report on Healthcare costs in Ontario revealed that caring for a patient at home saved 95% of costs when compared to hospital care2.

Even further, caring for terminally ill patients in an acute-care hospital is estimated to cost over 40% more than providing care in a hospital-based palliative-care unit, more than double the cost of providing care in a hospice bed, and over 10 times more than providing at-home care.

Another major cost driver for hospitals is medications. Not simply the cost of medications, although that alone is great and difficult to change, but the costs that are partially controllable, medication non-adherence and errors. On the healthcare front: A $300Billion medication non-adherence problem, results in 10-25% of hospital re-admissions, reduced outcomes, deaths and lost revenue.

On the pharma revenue front: Increasing adherence rates by only 10 percentage points would translate into a $41 billion** pharmaceutical revenue opportunity in the US ($124 billion globally), accompanied by improved health outcomes and decreased healthcare spending.

It would seem logical, at least to me, that if we can better treat patients or those with chronic care needs at home, we not only save the healthcare system a lot of money, but we can provide a better quality of care and life for patients through patient centered care. Promoting increased home care will also increase profitability for private care hospitals and reduce taxation, due to reduced healthcare costs, for the majority of taxpayers. We need to promote anyone or anything, including the adoption of Medipense’s RxPense product line, that facilitates the migration of patients towards home, provides better remote patient monitoring and better medication management and adherence.

One would think this would be a great election platform in both Canada and the USA. Unfortunately, hardly a peep is heard from any of our leaders.

1- What Are a Hospital’s Costs? Utah System Is Trying to Learn
By GINA KOLATA SEPT. 7, 2015, New York times.
2- Home Care Ontario - homecareontario.ca

** I’m being very conservative. The recent Capgemini study published online reveals $564 Billion is the global pharmaceutical revenue loss due to medication non-adherence, of which $188 Billion alone is attributed to the U.S.A.

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