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Background: Postacute care is a major driver of cardiac surgical episode spending, but the sources of variation in spending have not been explored. The objective of this study was to identify sources of variation in postacute care spending within 90-days of discharge following coronary artery bypass grafting (CABG) and aortic valve replacement (AVR) and the relationship between postacute care spending and other postdischarge utilization., Methods and Results: A retrospective analysis was conducted of public and private administrative claims for Michigan residents insured by Medicare fee-for-service and Blue Cross Blue Shield of Michigan/Blue Care Network commercial and Medicare Advantage plans undergoing CABG (n=11 208) or AVR (n=6122) in 33 nonfederal acute care Michigan hospitals between January 1, 2015 and December 31, 2018. Postacute care use was present in 9662 (86.2%) CABG episodes and 4242 (69.3%) AVR episodes, with respective mean (SD) 90-day spending of $4398±$6124 and $3465±$5759. Across hospitals, mean postacute care spending ranged from $3280 to $8186 for CABG and $2246 to $7710 for AVR. Inpatient rehabilitation and skilled nursing facility care accounted for over 80% of the variation spending between low and high postacute care spending hospitals. At the hospital-level, postacute care spending was modestly correlated across procedures and payers. Spending associated with readmissions, emergency department visits, and outpatient facility care was significantly different between low and high postacute care spending hospitals in CABG and AVR episodes., Conclusions: There was wide hospital variation in postacute care spending after cardiac surgery, which was primarily driven by differential use and intensity in facility-based postacute care. Optimizing facility-based postacute care after cardiac surgery offers unique opportunities to reduce potentially unwarranted care variation.

Background/objectives: Dementia is associated with higher healthcare expenditures, in large part due to increased hospitalization rates relative to patients without dementia. Data on contemporary trends in the incidence and outcomes of potentially preventable hospitalizations of patients with dementia are lacking., Design: Retrospective cohort study using the National Inpatient Sample from 2012 to 2016., Setting: U.S. acute care hospitals., Participants: A total of 1,843,632 unique hospitalizations of older adults (aged ≥65 years) with diagnosed dementia., Measurements: Annual trends in the incidence of hospitalizations for all causes and for potentially preventable conditions including acute ambulatory care sensitive conditions (ACSCs), chronic ACSCs, and injuries. In-hospital outcomes including mortality, discharge disposition, and hospital costs., Results: The survey weighted sample represented an estimated 9.27 million hospitalizations for patients with diagnosed dementia (mean [standard deviation] age = 82.6 [6.7] years; 61.4% female). In total, 3.72 million hospitalizations were for potentially preventable conditions (40.1%), 2.07 million for acute ACSCs, .76 million for chronic ACSCs, and .89 million for injuries. Between 2012 and 2016, the incidence of all-cause hospitalizations declined from 1.87 million to 1.85 million per year (P = .04) while the incidence of potentially preventable hospitalizations increased from .75 million to .87 million per year (P < .001), driven by an increased number of hospitalizations of community-dwelling older adults. Among patients with dementia hospitalized for potentially preventable conditions, inpatient mortality declined from 6.4% to 6.1% (P < .001), inflation-adjusted median costs increased from $7,319 to $7,543 (P < .001), and total annual costs increased from $7.4 to $9.3 billion. Although 86.0% of hospitalized patients were admitted from the community, only 32.7% were discharged to the community., Conclusion: The number of potentially preventable hospitalizations of older adults with dementia is increasing, driven by hospitalizations of community-dwelling older adults. Improved strategies for early detection and goal-directed treatment of potentially preventable conditions in patients with dementia are urgently needed. J Am Geriatr Soc 68:2240-2248, 2020., (© 2020 The American Geriatrics Society.)

Background and Aims: Liver cirrhosis is a substantial health burden in the USA, but population-based data regarding the trend and medical expenditure are limited and outdated. We investigated the trends of inpatient admissions, costs, and inpatient mortality from 2005 to 2015 among cirrhotic patients., Methods: A retrospective analysis was conducted using the National Inpatient Sample database. We adjusted the costs to 2015 US dollars using a 3% inflation rate. National estimates of admissions were determined using discharge weights., Results: We identified 1,627,348 admissions in cirrhotic patients between 2005 and 2015. From 2005 to 2015, the number of weighted admissions in cirrhotic patients almost doubled (from 505,032 to 961,650) and the total annual hospitalization cost in this population increased three times (from 5.8 to 16.3 billion US dollars). Notably, admission rates varied by liver disease etiology, decreasing from 2005 to 2015 among patients with hepatitis C virus (HCV)-related cirrhosis while increasing (almost tripled) among patients with nonalcoholic fatty liver disease (NAFLD)-related cirrhosis. The annual inpatient mortality rate per 1000 admissions overall decreased from 63.8 to 58.2 between 2005 and 2015 except for NAFLD (27.2 to 35.8) (P < 0.001)., Conclusions: Rates and costs of admissions in cirrhotic patients have increased substantially between 2005 and 2015 in the USA, but varied by liver disease etiology, with decreasing rate for HCV-associated cirrhosis and for HBV-associated cirrhosis but increasing for NAFLD-associated cirrhosis. Inpatient mortality also increased by one-third for NAFLD, while it decreased for other diseases. Cost also varied by etiology and lower for HCV-associated cirrhosis.

Background: Nonalcoholic fatty liver disease (NAFLD) is the fastest-growing chronic liver disease. However, little is known about NAFLD inpatient resource utilization and clinical outcomes., Aims: The aim of this study was to quantify inpatient NAFLD encounters using patient-level data over time., Methods: This was a retrospective analysis of de-identified data for NAFLD patients from the California Patient Discharge Database from 2006 to 2013. NAFLD patients were identified by ICD9 codes 571.40, 571.41, 571.49, 571.8, and 571.9., Results: NAFLD patients (n = 91,558) were predominantly female (60%), 45-65 years old (44%), and white (53%). Inpatient encounters increased from 8153 in 2006 to 16,457 in 2013 and were associated with a 207% increase in charges ($686 million in 2006 to $1.42 billion in 2013) and average increase in charges of 9.8% per year adjusting for inflation. Comorbidities (obesity, diabetes, hyperlipidemia, cardiovascular disease, other cancer, and renal disease) increased significantly over time (all P < 0.05). From 2006 to 2011, there were 11,463 deaths (1849 for liver-related hospitalizations) (mean follow-up 4.00 ± 2.13 years). The most significant predictors of death were age > 75 (aHR 3.9, P < 0.0001), male gender (aHR 1.10, P < 0.0001), white race (aHR 1.2, P < 0.0001), decompensated cirrhosis (aHR 2.1, P < 0.0001), and cancer other than HCC (aHR 3.2, P < 0.0001). Within the liver-related hospitalization cohort, mortality predictors were similar, except for Hispanic race (aHR 0.92, P < 0.0096) and renal disease (aHR 1.50, P < 0.0001)., Conclusions: The number of NAFLD inpatient encounters increased significantly from 2006 to 2013, as did the inflation-adjusted inpatient charges. The most significant predictors of death were non-liver cancers (HR 3.11, P < 0.0001, CI 3.06-3.16) and age > 75 years (HR 3.94, P < 0.0001, HR 3.86-4.03).

Objective: We sought to assess hospital cost variation for elective inpatient surgical procedures within small geographic areas., Summary Background Data: Previous studies have documented cost variation for inpatient surgical procedures on a national basis, suggesting opportunities for savings. Cost variation within small geographic areas is more relevant to policymakers, providers, and patients, but it has not been studied., Methods: Using Medicare payment data, we identified elderly patients undergoing 1 of 7 elective inpatient surgical procedures during 2010-2012. We calculated 30-day surgical episode costs including payments for the index hospitalization, readmission, physician services, and post-acute care. Using hierarchical regression models, we identified hospitals with significantly higher average costs than the least expensive hospitals in their metropolitan statistical areas., Results: The proportion of patients undergoing surgery at the lowest-cost hospitals in their metropolitan statistical areas ranged from 10% for hip replacement to 25% for coronary artery bypass grafting. In contrast, the proportion of patients undergoing surgery at significantly higher-cost hospitals ranged from 5.0% for bariatric surgery to 64% for hip replacement. These high-cost hospitals had higher complication and readmission rates than their lowest-cost peers. Surgery at high-cost hospitals resulted in Medicare expenditures that were $4427 to $10,417 higher than those at the lowest-cost hospitals, increasing episode costs by 25% to 47% per case., Conclusions: Significant excess expenditures are incurred due to care at hospitals with substantially higher average costs than their nearby peers. This finding highlights the potential for substantial savings without the need to refer patients over long distances. Some of the procedures studied may represent appropriate targets for future Medicare bundled payment initiatives.

The state of Maryland, in collaboration with the Centers for Medicare & Medicaid Services, developed the first all-payer system model in the Unites States in 1971 and 35 years later in response to financial pressures undertook to modernize this program. The focus of the modernized program was to improve overall per-capita expenditure, quality of care, and the outcome of Marylanders' health. The financial status of Maryland hospitals was declining because of the rate setting of the Health Services Cost Review Commission while hospital admission rates and spending were increasing. This study showed positive change in moving Maryland health care delivery model in hospitals from volume-driven care to value-driven coordinated care. Maryland hospitals have changed their mind-sets to achieve the Triple Aim of cost reduction, health improvement, and quality-of-care improvement. The modernized model does require hospitals and business individuals to change their approach to be accountable in providing health care to all citizens, as well as trying to solve chronic social problems such as poverty and unequal access to health care.

Background: Cardiovascular diseases (CVDs) constitute the second leading cause of death in France. The Système national d'information interrégimes de l'assurance maladie (SNIIRAM; national health insurance information system) can be used to estimate the national medical and economic burden of CVDs., Objectives: To describe the rates, characteristics and expenditure of people reimbursed for CVDs in 2013., Methods: Among 57 million general health scheme beneficiaries (86% of the French population), people managed for CVDs were identified using algorithms based on hospital diagnoses either during the current year (acute phase) or over the previous 5 years (chronic phase) and long-term diseases. The reimbursed costs attributable to CVDs were estimated., Results: A total of 3.5 million people (mean age, 71 years; 42% women) were reimbursed by the general health scheme for CVDs (standardized rate, 6.5%; coronary heart disease, 2.7%; arrhythmias/conduction disorders, 2.1%; stroke, 1.1%; heart failure, 1.1%). These frequencies increased with age and social deprivation, and were higher in Northern and Eastern France and Réunion Island. The total sum reimbursed by all schemes for CVDs was € 15.1 billion (50% for hospital care and 43% for outpatient care [including 15% for drugs and 12% for nurses/physiotherapists]); coronary heart disease accounted for € 4 billion, stroke for € 3.5 billion and heart failure for € 2.5 billion (i.e. 10% of the total expenditure reimbursed by all national health insurance schemes for all conditions)., Conclusion: CVDs constitute the leading group in terms of numbers of patients reimbursed and total reimbursed expenditure, despite a probable underestimation of both numbers and expenditure., (Copyright © 2016 Elsevier Masson SAS. All rights reserved.)

Objective: To examine the magnitude and sources of inpatient cost variation for kidney transplantation., Methods: We used the 2005-2009 Nationwide Inpatient Sample to identify patients who underwent kidney transplantation. We first calculated the patient-level cost of each transplantation admission and then aggregated costs to the hospital level. We fit hierarchical linear regression models to identify sources of cost variation and to estimate how much unexplained variation remained after adjusting for case-mix variables commonly found in administrative datasets., Results: We identified 8866 living donor (LDRT) and 5589 deceased donor (DDRT) renal transplantations. We found that higher costs were associated with the presence of complications (LDRT, 14%; P <.001; DDRT, 24%; P <.001), plasmapheresis (LDRT, 27%; P <.001; DDRT, 27%; P <.001), dialysis (LDRT, 4%; P <.001), and prolonged length of stay (LDRT, 84%; P <.001; DDRT, 82%; P <.001). Even after case-mix adjustment, a considerable amount of unexplained cost variation remained between transplant centers (DDRT, 52%; LDRT, 66%)., Conclusion: Although significant inpatient cost variation is present across transplant centers, much of the cost variation for kidney transplantation is not explained by commonly used risk-adjustment variables in administrative datasets. These findings suggest that although there is an opportunity to achieve savings through payment reforms for kidney transplantation, policymakers should seek alternative sources of information (eg, clinical registry data) to delineate sources of warranted and unwarranted cost variation., (Published by Elsevier Inc.)

Importance: Under bundled payment programs, hospitals receive a single payment for all services provided surrounding an episode of care. Because health care providers, such as hospitals and physicians, accept more financial risk under these programs, they will need a better understanding of episode costs to identify areas to target improvements in quality and cost-efficiency., Objective: To examine hospital variation in episode costs for a common high-risk procedure that is a prime candidate for bundled payment programs (ie, bariatric surgery)., Design, Setting, and Participants: In this retrospective cohort study, we used national Medicare claims data and identified patients undergoing bariatric procedures in 2011-2012 (N = 24 647 patients; 463 hospitals). We calculated risk-adjusted Medicare payments from the date of admission for the index procedure to 30 days following discharge. We then divided hospitals into equally sized quartiles and examined variation in payments for services around episodes of care. Medicare payments were examined by service payment type (ie, payments to hospitals, payments to physicians, and payments for postacute care services) across hospital quartiles., Main Outcomes and Measures: Hospital variation in episode costs for services around an episode of bariatric surgery., Results: Mean total payments for bariatric procedures varied from $11 086 to $13 073 per episode of care, resulting in a mean difference of $1987 (16.5% difference) per episode of care between the lowest and highest hospital quartiles. The index hospitalization was responsible for the largest portion of total payments (75%), followed by physician services (21%) and postacute care services (2.8%). Payments for index hospitalization accounted for the greatest variation in payments., Conclusions and Relevance: There are variations in hospital episode payments among Medicare patients undergoing bariatric surgery procedures. As hospitals enter bundled payment programs, they will need to target areas with the largest variation in costs for quality- and efficiency-improvement activities.

Objective: The objective of this study was to review vascular surgical financial trends in a tertiary care setting and to evaluate the impact of a vascular program within a health care system in the face of lower reimbursements and rising costs., Methods: With use of Current Procedural Terminology codes and diagnosis-related groups, vascular categories of aortic disease, cerebrovascular disease, and peripheral occlusive disease (POCD) were identified at an academic tertiary health care center. Hospital margins were calculated for each of the defined categories by Health Quest cost accounting data cross-walked with Current Procedural Terminology codes, date of service, and admitting physician for each year from 2010 to 2012., Results: All categories realized volume growth and a positive margin for the hospital. In comparison of 2010 and 2012, aortic cases showed an overall volume growth of 19%, revenue increase of 31%, and cost increase of 54%, resulting in an overall margin decrease of 7%. Cerebrovascular cases showed a 30% increase in volume growth, revenue increase of 13%, and cost increase of 5%, resulting in a margin increase of 18%. POCD cases showed overall volume growth of 35%, revenue increase of 37%, cost increase of 54%, and a margin increase of 15%. The margin for POCD exceeded the margin for aortic and cerebrovascular cases combined by 77%., Conclusions: In evaluating a vascular program's fiscal viability, volume-driven POCD was the only category producing growing hospital margins in the face of significant cost increases., (Copyright © 2014 Society for Vascular Surgery. Published by Mosby, Inc. All rights reserved.)

Background: United States health care spending rose rapidly in the 2000s, after a period of temporary slowdown in the 1990s. However, the description of the overall trend and the understanding of the underlying drivers of this trend are very limited. This study investigates how well historical hospital cost/revenue drivers explain the recent hospital spending trend in the 2000s, and how important each of these drivers is., Methods: We used aggregated time series data to describe the trend in total hospital spending, price, and quantity between 2001 and 2009. We used the Oaxaca-Blinder method to investigate the relative importance of major hospital cost/spending drivers (derived from the literature) in explaining the change in hospital spending patterns between 2001 and 2007. We assembled data from Medicare Cost Reports, American Hospital Association annual surveys, Prospective Payment System (PPS) Impact Files, Medicare Provider Analysis and Review (MedPAR) Medicare claims data, InterStudy reports, National Health Expenditure data, and Area Resource Files., Results: Aggregated time series trends show that high hospital spending between 2001 and 2009 appears to be driven by higher payment per unit of hospital output, not by increased utilization. Results using the Oaxaca-Blinder regression decomposition method indicate that changes in historically important spending drivers explain a limited 30% of unit-payment growth, but a higher 60% of utilization growth. Hospital staffing and labor-related costs, casemix, and demographics are the most important drivers of higher hospital revenue, utilization, and unit-payment. Technology is associated with lower utilization, higher unit payment, and limited increases in total revenue. Market competition, primarily because of increased managed care concentration, moderates total revenue growth by driving lower unit payment., Conclusions: Much of the rapidly rising hospital spending growth in the 2000s in the United States is driven by factors not commonly known or well measured. Future studies need to explore new factors and dynamics that drive longer-term hospital spending growth in recent years, particularly through the channel of higher prices.

Introduction: While neonates account for a significant proportion of health care expenditures related to inpatient care for congenital heart disease, key drivers of resource utilization among this population are poorly defined., Methods: Data from 2005 through 2011 were extracted from the Pediatric Health Information System for patients assigned a discharge All Patient Refined Diagnosis Related Group of 630 (neonates with birthweight >2499 g undergoing a major cardiovascular procedure). Mortality risk adjustment for patients undergoing operative interventions was performed with the Risk Adjusment in Congenital Heart Surgery (RACHS-1) score., Results: A total of 13 156 cases were included in the analysis. Despite only a 3% increase in case mix index and no significant change in operative acuity over the study period (RACHS classifications of 3 or greater 67% in 2005 vs. 66% in 2011, P = .64), there were inflation-adjusted increases in both total estimated cost per case of (50% to $151 760 in 2011, P < .001), and mean charge per case (33% to $433 875 in 2011, P < .001). Pharmacy charges increased by 16% (P < .001), with agents including chlorothiazide and albumin accounting for the highest patient charges over the study period. Imaging charges increased by 42% (P < .001), with an average of 5.7 echocardiograms and $6517 in associated charges per case by 2011. While the proportion of patients receiving nitric oxide remained consistent, mean duration of administration increased by 25% to 6.6 days by 2011, accounting for average charges of $52 141 per patient exposed., Conclusions: Among neonates with serious congenital heart disease, increases in both institutional costs and charges to the patient are associated with relatively consistent utilization practices in recent years. Multiinstitutional collaboration may prove useful in aligning evidence-based reductions in practice variation with limitations in resource utilization without compromising the quality of care., (© 2013 Wiley Periodicals, Inc.)

Private insurers pay widely varying prices for inpatient care across hospitals. Previous research indicates that certain hospitals use market clout to obtain higher payment rates, but there have been few in-depth examinations of the relationship between hospital characteristics and pricing power. This study used private insurance claims data to identify hospitals receiving inpatient prices significantly higher or lower than the median in their market. High-price hospitals, compared to other hospitals, tend to be larger; be major teaching hospitals; belong to systems with large market shares; and provide specialized services, such as heart transplants and Level I trauma care. High-price hospitals also receive significant revenues from nonpatient sources, such as state Medicaid disproportionate-share hospital funds, and they enjoy healthy total financial margins. Quality indicators for high-price hospitals were mixed: High-price hospitals fared much better than low-price hospitals did in U.S. News & World Report rankings, which are largely based on reputation, while generally scoring worse on objective measures of quality, such as postsurgical mortality rates. Thus, insurers may face resistance if they attempt to steer patients away from high-price hospitals because these facilities have good reputations and offer specialized services that may be unique in their markets.

Objective: To determine whether simply being made continually aware of the hospital costs of daily phlebotomy would reduce the amount of phlebotomy ordered for nonintensive care unit surgical patients., Design: Prospective observational study., Setting: Tertiary care hospital in an urban setting., Participants: All nonintensive care unit patients on 3 general surgical services., Intervention: A weekly announcement to surgical house staff and attending physicians of the dollar amount charged to nonintensive care unit patients for laboratory services during the previous week., Main Outcome Measure: Dollars charged per patient per day for routine blood work., Results: At baseline, the charges for daily phlebotomy were $147.73/patient/d. After 11 weeks of residents being made aware of the daily charges for phlebotomy, the charges dropped as low as $108.11/patient/d. This had a correlation coefficient of -0.76 and significance of P = .002. Over 11 weeks of intervention, the dollar amount saved was $54,967., Conclusion: Health care providers being made aware of the cost of phlebotomy can decrease the amount of these tests ordered and result in significant savings for the hospital.

Taiwan implemented the National Health Insurance system (NHI) in 1995. After the NHI, the insurance coverage expanded and the quality of healthcare improved, however, the healthcare costs significantly escalated. The objective of this study is to determine what factors have direct impact on the increased costs after the NHI. Panel data analysis is used to investigate changes and factors affecting cost containment at Taipei municipal hospitals from 1990 to 2001. The results show that the expansion of insured healthcare coverage (especially to the elderly and the treatment of more complicated types of diseases), and the increased competition (requiring the growth of new technology and the longer average length of stay) are important driving forces behind the increase of hospital costs, directly influenced by the advent of the NHI. Therefore, policymakers should emphasize health prevention activities and disease management programs for the elderly to improve cost containment. In addition, hospital managers should find ways to improve the hospital efficiency (shorten the LOS) to reduce excess services and medical waste. They also need to better understand their market position and acquire suitable new-tech equipment earlier, to be a leader, not a follower. Finally, policymakers should establish related benchmark indices for what drivers up hospital costs (micro-aspect) and to control healthcare expenditures (macro-level).

Unlabelled: The popularity of total knee arthroplasty combined with the aging US population indicates a dramatic increase in revision TKA procedures. Our objective was to project revision surgery costs in the United States, and to estimate the financial burden for hospitals historically under-reimbursed for these complex surgical procedures. Inflation adjusted charge data derived from a series of knee revision surgeries performed by a single surgeon practice (CJL) (n = 100) were applied to population projections of the number of revision surgeries expected for the Medicare population from 2005-2030. The average charge of TKA revision surgery was 73,696 dollars, (Cost was 36,848 dollars) with substantially higher costs for patients undergoing surgery because of deep joint infection, patients receiving a three component exchange, and patients receiving hinged or constrained condylar knee implants. The number of revision procedures is expected to increase from 37,544 in 2005 to 56,918 in 2030. Projected hospital costs for these procedures may exceed 2 billion dollars by 2030. The number of revision knee surgeries may increase by 66% in the next 25 years. Reimbursement rates will not cover hospital costs for this procedure despite recent increases in Medicare payments for revision arthroplasty., Level of Evidence: Economic analysis study, level III. See the Guidelines for Authors for a complete description of levels of evidence.

Background: Obtaining well-founded estimates of the effect of demographic change on future health expenditures is a pressing issue in all developed countries. Thus far, expenditure projections have examined the effect of age on health care costs, but fail to account for the influence of remaining life expectancy on costs., Objective: This paper seeks to create a more accurate projection model that considers the concentration of costs towards the end of life, and to compare this model with the more traditional approach that holds age- and sex-specific per capita expenditures constant., Methods: We used a longitudinal hospital dataset which followed 90 929 patients aged 65 and older from 1970 to death, to create an economic model of hospital costs based on patient age and time remaining to death. We then applied the model to England population projections to predict the effect of demographic changes on hospital expenditures from 2002 to 2026., Results: The decline in age-specific mortality rates over time postpones death to later ages, pushing back death-related costs. Accounting for this in expenditure projections gave a predicted annual growth rate of 0.40%-half of the rate predicted with a traditional method., Conclusions: Using richer data and more refined methods than have hitherto been employed, this study strongly confirms that the pressure of population increases and ageing demographic structure on hospital expenditures will be partially countered by the postponement of death-related hospital costs to later in life-a finding consistent with emerging epidemiological evidence, and heartening for policy makers and physicians alike.

Objective: To evaluate the determinants of increased hospital inpatient expenditure growth since 1998., Data Sources and Methods: Multivariate regression analyses were estimated for 1998-2001 utilizing state-level information 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% annually, twice the 2.9% annual rate of inflation. Overall level of economic activity, price-level variation, hospital technology, hospital market, and healthcare labor force are the most important drivers of recent trends in inpatient expenditures. Inpatient costs were responsive to hospital market characteristics. Each 1% increase in for-profit and medical system (chain ownership) hospital percentage was associated with approximately a 2% increase in inpatient expenditures. Each 1% increase in network (shared purchasing or other arrangement, but not ownership) hospital percentage was associated with a 1% decrease in inpatient expenditures. Each 1% increase in the gap between registered nurse demand and supply led to a 0.5% to 1% increase in hospital inpatient expenditures per capita., Conclusions: Many characteristics contribute to inpatient expenditure growth, such as local area wages and incomes per capita, and physician market characteristics, but are not directly influenced by hospital market policies. Hospital technology and market structure are the 2 factors that are most directly amenable to healthcare policy intervention. Hospital occupancy and case-mix severity also have substantial effects on inpatient expenditure growth. With the nurse supply shortage projected to increase by 40% between 2000 and 2005, upward pressures on inpatient costs will remain.

Background: After the declining growth in inpatient hospital spending that occurred from 1994 through 1998, the recent trend in increased spending has been of concern to many. Understanding the underlying reasons for this new growth will aid decision makers in finding best means to manage inpatient costs., Objective: To identify potential contributors to recent growth in inpatient spending., Study Design: Literature review., Methods: Healthcare and economic databases, prominent Web sites, and key journals were searched to identify potential drivers for the 1999-2001 rise in inpatient spending. Initial literature review and state-level regression analyses published in a companion paper were used to identify key explanatory factors, which were further explored., Results: Although many of the contributors to the rise in inpatient costs overlap and are interrelated, the major cost drivers were identified as (1) workforce shortage; (2) new technology; (3) less tightly managed care; and (4) shifting hospital business directions. Underlying factors such as legislation, quality of care, limited access to noninpatient care, pressures on the safety net, population aging, and increasing chronic illness prevalence were found to influence the contributors and healthcare spending in general., Conclusions: Future trends in inpatient spending will depend on the response of the healthcare system to these cost drivers and underlying factors. Potential avenues to control inpatient spending include expanding access to primary care, encouraging cost-effective technology and more efficient hospital market structures, and developing incentives for the healthcare workforce.

This Data Bulletin is based on data from the Milliman USA Health Cost Index ($0 deductible), which is designed to reflect claims increases faced by private insurers; the Kaiser Family Foundation/Health Research and Educational Trust survey of employer-based health plans for 1999- 2002; the KPMG survey of employer-based plans for 1991-98; and the U.S. Bureau of Labor Statistics Employment, Hours and Earnings series to track payroll costs and Hospital Producer Price Index to track hospital prices.

This paper develops a simple model of payment incentives and empirically evaluates provider payment reform in Hainan Province, China. We use a pre-post study design with a control group to analyse two years of claims data to assess the impact of a January 1997 change to prospective payment for a sub-sample of the hospitals. This difference-in-difference empirical strategy allows us to isolate the supply-side payment reform effects from demand-side changes, in contrast with previous studies of China's reforms. Our results validate the theory that Chinese providers' behavioural response to payment incentives is similar to that reported in the literature derived from the experience of industrialized countries. We find that prepayment is associated with a slower rate of growth of overall expenditures, programme spending and patient co-payments per inpatient admission, compared to fee-for-service (FFS). These findings suggest cautious optimism regarding the effectiveness of prospective payment for controlling costs and should be encouraging for policymakers in developing and transitional economies considering replacement of FFS with more aggregated forms of provider payment., (Copyright 2001 John Wiley & Sons, Ltd.)

Background: The introduction of expensive but very effective antiviral medications has led to questions about the effects on the total use of resources for the care of patients with human immunodeficiency virus (HIV) infection. We examined expenditures for the care of HIV-infected patients since the introduction of highly active antiretroviral therapy., Methods: We interviewed a random sample of 2864 patients who were representative of all American adults receiving care for HIV infection in early 1996, and followed them for up to 36 months. We estimated the average expenditure per patient per month on the basis of self-reported information about care received., Results: The mean expenditure was $1,792 per patient per month at base line, but it declined to $1,359 for survivors in 1997, since the increases in pharmaceutical expenditures were smaller than the reductions in hospital costs. Use of highly active antiretroviral therapy was independently associated with a reduction in expenditures. After adjustments for the interview date, clinical status, and deaths, the estimated annual expenditure declined from $20,300 per patient in 1996 to $18,300 in 1998. Expenditures among subgroups of patients varied by a factor of as much as three. Pharmaceutical costs were lowest and hospital costs highest among underserved groups, including blacks, women, and patients without private insurance., Conclusions: The total cost of care for adults with HIV infection has declined since the introduction of highly active antiretroviral therapy. Expenditures have increased for medications but have declined for other services. However, there are large variations in expenditures across subgroups of patients.

Objectives: In this project we assessed the impact of 1992 budget cuts ($50 million, or approximately 7% of urban hospitals' budgets) on the relative costliness of Manitoba's hospitals. The cuts targeted the teaching hospitals, those institutions we had found to be particularly costly in a previous Manitoba Centre for Health Policy and Evaluation study., Results: Unexpectedly, we found that because budget cuts were smaller proportionately than the number of beds closed, the care at the teaching hospitals (as well as at several other hospitals) became relatively more, not less, costly. Also quite contrary to public perceptions, once other expenditures such as new hospital programs and expansions were accounted for, the actual change in urban hospital expenditures over the years compared was less than 1%., Conclusions: The study highlighted the importance of monitoring program outcomes.

If global budgets consistently reduce health care expenditures by cutting inefficiency and economic rents (i.e., by lowering the relative price of services), their appeal as a public policy tool is clear. This paper shows the French inpatient global budget policy, implemented in 1984, was successful in slowing expenditure growth. It did so, however, by reducing the volume of services; the relative price of these services remained constant. Compared with previous research, these findings suggest the effect of global budgets depends on the method of implementing the policy and the health care infrastructure on which the expenditure policy is imposed.