TECHOLOGY EXPLOSION AND HOSPITAL CONSOLIDATION DRIVE HEALTH CARE COSTS

PR Newswire –

PORTLAND, Ore. and CHICAGO, Oct. 25 -- The rapid proliferation of new medical technology and the rising trend of hospital consolidation -- two largely controllable factors -- are leading causes behind double-digit healthcare cost increases, according to new research released by the Blue Cross and Blue Shield Association (BCBSA). The research is the most comprehensive analysis to date of the leading drivers of rising healthcare costs.

Of all the key market forces driving healthcare costs, 79 percent are wrapped up in hospital and physician costs, with pharmaceuticals making up about 21 percent, according to a recent study. Inpatient hospital costs are outstripping pharmaceutical costs as a primary driver of healthcare inflation.

BCBSA's research shows:

-- 34 percent of the increase from 1998 through 2001 is due to inpatient hospital costs

-- 19 percent of escalating inpatient hospital and outpatient costs are directly related to the use and deployment of medical technology

"In some cases, technology advances benefit patients by preventing the onset of disease, enabling earlier detection and saving lives," said BCBSA president and CEO Scott P. Serota. "All this advanced technology will mean little, however, if no one can afford it. All too often, investments in new technology are made with too little thoughtful planning based on sound medical evidence and a realistic assessment of community needs."

The technology explosion is occurring against a backdrop of rising provider consolidation, which the research shows is accounting for 18 percent of the recent rise in spending for inpatient hospital services. According to the research, every 1 percent increase in hospital market share due to consolidation leads to an approximate 2 percent increase in inpatient expenditures. Additionally, provider market structure accounts for 35 percent of the rise in outpatient expenditures between 1998 and 2000.

The research being released today is the most comprehensive analysis to date of the forces behind hospital and physician costs and offers the greatest opportunity for crafting meaningful ways to improve healthcare affordability and access to care. "It is a solid foundation for the Blue Cross and Blue Shield Association's multiyear initiative to find ways for keeping healthcare affordable and reducing the number of uninsured Americans," Serota said.

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