High-Tech Versus High-Touch: Components of Hospital Costs Vary Widely

The recent release by the Centers for Medicare & Medicaid Services of hospital charge and payment data to the public has renewed a national dialogue on hospital costs and prices. However, to better understand the driving force of hospital pricing and to develop strategies for controlling expendi...

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Bibliographic Details
Published in:Journal of healthcare management 2017-05, Vol.62 (3), p.186-194
Main Authors: Song, Paula H, Reiter, Kristin L, Yi Xu, Wendy
Format: Article
Language:English
Subjects:
Capital costs
Comorbidity
Consumer Price Index
Cost Control
Cost reduction
Expenditures
Fees & charges
Health administration
Health care expenditures
Health care policy
Health Expenditures
Hospital Costs
Human capital
Humans
Intensive care
Medicaid
Medical equipment
Medicare
Patient Care
Sepsis
Studies
United States
Ventilators
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Summary:The recent release by the Centers for Medicare & Medicaid Services of hospital charge and payment data to the public has renewed a national dialogue on hospital costs and prices. However, to better understand the driving force of hospital pricing and to develop strategies for controlling expenditures, it is important to understand the underlying costs of providing hospital services. We use Medicare Provider and Analysis Review inpatient claims data and Medicare cost report data for fiscal years 2008 and 2012 to examine variations in the contribution of "high-tech" resources (i.e., technology/medical device-intensive resources) versus "high-touch" resources (i.e., labor-intensive resources) to the total costs of providing two common services, as well as assess how these costs have changed over time. We found that high-tech inputs accounted for a greater proportion of the total costs of surgical service, whereas medical service costs were primarily attributable to high-touch inputs. Although the total costs of services did not change significantly over time, the distribution of high-tech, high-touch, and other costs for each service varied considerably across hospitals. Understanding resource inputs and the varying contribution of these inputs by clinical condition is an important first step in developing effective cost control strategies.
ISSN:1096-9012
1944-7396
DOI:10.1097/JHM-D-15-00040