Hospitals and rise in health jobs blamed as medical costs head north, again

hjobs-300x169Although Americans’ spending for prescription drugs has taken a surprising dip, overall costs of medical care keep heading north. The rise this year is faster than it has been in a while. The culprit? Look to big, shiny hospitals. Or look around at people flocking to well-paying jobs in the health care sector.

Modern Healthcare, a trade industry publication, reported that “rising hospital price growth in March [of 2018] drove overall health care price increases to their highest rate since January 2012.”

It’s unclear exactly why hospitals increased prices, except maybe because they can, the magazine said, citing research by the nonprofit health research group Altarum. Its experts, and those quoted by Modern Healthcare, suggested that hospitals may have taken an earlier hit to their finances due to rising drug costs. Hospitals, after lagging, only now may be trying to recoup those costs by hitting patients with price increases at a time when the economy seems more solid.

As for Big Pharma and its usually spiking costs, Altarum found:

Prices of drugs grew only 1.9 percent last month, down significantly from 4.7 percent one year prior. That’s likely because there have been few blockbuster specialty drugs as of late …. But it’s also the result of recent headlines and court cases surrounding the skyrocketing price of generic drugs.

Don’t imagine, of course, that Big Pharma will cut its nose-bleed high prices any time soon, especially as political leaders have gone largely silent on drug costs, and President Trump isn’t expected to do much more than bellow about the issue in an impending speech.

In fact, for those who want their blood pressure to spike, it may be worth reading a Washington Post story about a newish $148,000-a-year pill for blood cancer. Just as medical scientists started to figure that some patients could take lower doses of this drug – and save themselves and their families a bundle – the medication’s maker beat them to the punch. The firm tripled the drug’s cost and changed its available dosages, measures that quashed even thinking about ways to save patients from a huge financial burden.

Some other researchers, meantime, have found an obvious but perhaps less-considered reason why medical costs may stay in the stratosphere: With America growing grayer and sicker by the day,  health care has become the nation’s largest employer, and, while that may be good for the economy over all, it spells bad news for efforts to contain medical costs.

As the researchers from Harvard and Dartmouth noted in their published viewpoint in the medical journal JAMA:

It is not surprising that employment growth should be a bellwether for rising health care expenditures because salaries and wages account for an average 55 percent of operating expenses for hospitals, physician offices, and outpatient care, and nearly 70 percent of hospital expenses. The problem is that the United States cannot reduce growth of health care costs without a corresponding moderation in the growth of health care employment. In the health care industry, this association is particularly strong because most hospitals have not-for-profit status. Unlike for-profit industries that will reduce employment and return profits to shareholders, not-for-profit entities cannot return their profits; instead they expand services. For example, a recent study found that hospitals experiencing an unexpected 10 percent boost in Medicare reimbursement rates added new technology, boosted nursing staff by 16 percent, and increased their payroll by nearly one-third.

The researchers chide politicians for their cozy relationships with hospitals, awarding them with taxpayer support so they can, for example, add jobs and even more workers. That sounds great. But somebody pays for it. (Hint: It’s all of us.) The scholars also say that it might feel good to make high-paid hospital administrators the target for public ire. But cutting their pay or number wouldn’t do much in the scheme of things.

In my practice, I see not only the significant harms that patients suffer while seeking medical services but also their heart-wrenching struggles to access and afford safe, effective, and quality medical care. As a nation, we spend 18 percent of the gross domestic product or just north of $3 trillion on health care, and, at some point, this profit-grabbing sector – which doesn’t make us anywhere near the healthiest people among those who live in the industrialized west – must be reined in.

Politicians and policy-makers have waged war for enough time already about a slice of our cost mess – health insurance, especially under the government- assisted markets of the Affordable Care Act, aka Obamacare. We need to do more than divide ourselves on a partisan basis. We need to advance much further the tough conversations on how we ensure all Americans can get safe, affordable, effective, and excellent medical care, without bankrupting themselves and their families.

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