Hospital Cost Drivers: An Evaluation of 1998-2001 State-Level Data


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Joel W. Hay, PhD. American Journal of Managed Care 2003;9:SP13-SP24.

Focus: To evaluate the determinants of increased hospital inpatient expenditure growth since 1998.

Study Design: Multivariate regression using state-level data for l998 to 2001 from nationally representative population sources, US government agencies, and aggregate expenditures estimated from a nationally representative, large health insurance plan (LHIP).

Results:

  • During 1998-2001, LHIP inpatient expenditures per member increased by an average of 5.9 percent annually, twice the 2.9 percent annual rate of inflation. The factors accounting for cross-sectional variations and growth over time among LHIP members are shown in the pie chart below. Each segment represents the fraction of total inpatient expenditure growth attributable to each cost driver if each of the drivers changed by one percent.
  • Each one percent increase in the percentage of hospitals that are part of hospital systems was associated with about a two percent increase in inpatient expenditures.
  • Each one percent increase in the gap between the supply and demand for registered nurses led to a 0.5 percent to one percent increase in inpatient expenditures per capita.


Full Study:
Hospital Cost Drivers: An Evaluation of 1998-2001 State-Level Data (PDF format, 314KB)