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High Hospital Costs Encourage New Entrants To Market

Posted by Laura McMullen on Thu, Mar 10, 2016

Hospitals are the cornerstone of our healthcare system. The Centers for Disease Control and Prevention’s National Center for Health Statistics reports there were 35.1 million discharges in 2010 with an average length of stay of 4.8 days, based on the National Hospital Discharge Survey. The 2014 National Health Interview Survey showed that just 7.3% of Americans had an overnight hospital stay. Even though most people don’t need to go to the hospital regularly, hospital costs are what we’re insuring against when we buy health insurance.

According to Kaiser State Health Facts, the adjusted average hospital expenses per inpatient day in 2014 were:dollar.png

  • $2,346 for non-profit hospitals
  • $1,974 for state/local government hospitals
  • $1,798 for for-profit hospitals

So for an average hospital stay at a non-profit community hospital, the cost would be approximately $11,250 or 21% of the median household income of $53,657. Fortunately, most people won’t need to go to the hospital at all.

The American Hospital Association reports there are just 5,627 hospitals in the US. While all accept Medicare, NetMinder shows that 85% are in-network for the broadest national commercial health insurance networks. This means that roughly two-thirds of the US population is a potential customer for 3,800 hospitals.

Hospital Alternatives

With a limited footprint, high demand for services, and third-party payment mechanisms, it’s no surprise that substitutes and complements are entering the marketplace.

  • Ambulatory surgery centers. There are approximately 5,000 ambulatory surgery centers in the US. According to the Ambulatory Surgery Center Association, its members offer “same-day surgical care, including diagnostic and preventive procedures.” Common services are cataract surgery and colonoscopies.
  • Urgent care centers. The Urgent Care Association of America estimates that there are about 7,100 urgent care centers in the US. These facilities offer “a baseline of a broad scope of both ‘primary care’ type services as well as more acute care that is beyond the typical primary care office but below the treatment of life or limb-threatening conditions.”  Patients frequently need treatment for sprains, fevers without a rash, and ear pain.

While hospitals, ambulatory surgery centers, and urgent care centers compete for patients, they also have an opportunity to deliver on the promise of the Triple Aim: applying integrated approaches to simultaneously improve care, improve population health, and reduce costs per capita. Whether your book of business includes government-sponsored plans, individual plans, or employer-sponsored plans, all customers benefit from increased access to quality care.

How well are ambulatory surgery centers represented in your network? What about urgent care centers?

Tags: medicare, American Hospital Association, ambulatory surgery centers, urgent care centers, healthcare system, healthcare providers





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