Rising Cost of Inpatient Care Linked to Medical Devices and Supplies

Release Date: August 29, 2012 | By Glenda Fauntleroy, Contributing Writer
Research Source: Health Services Research

KEY POINTS

  • Supplies and devices, such as stents and artificial joints, accounted for the largest proportion of hospital inpatient cost increases between 2001 and 2006.
  • The significant growth in the mean cost per discharge of supplies and devices suggests their effectiveness should be examined more closely.
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Inpatient hospital treatment accounts for the largest proportion of health care spending in the U.S., with the use of diagnostic imaging services such as MRIs, frequently implicated as the probable cause.  A new analysis finds that the biggest expense may not be imaging technology but from supplies including medical devices, such as stents and artificial joints. “One of the take-away messages for hospitals is that they should examine their own data in closer detail to explore the costs that are rapidly rising and have a better understanding for the underlying reasons,” said lead author Jared Lane Maeda, Ph.D., of Truven Health Analytics in Washington, D.C.

The study, released in Health Services Research, used the 2001 and 2006 Healthcare Cost and Utilization Project State Inpatient Databases and Medicare Cost Reports for community, non-rehabilitation hospitals in nine states. The researchers conducted a cost analysis on more than 10.2 million patient discharges for various conditions.

At 24.2 percent of costs, “supplies and devices,” (defined as the “supply items required for patient care”) were the leading contributors to the increase in average cost per discharge. Intensive care unit charges contributed 17.6 percent, and room and board for a semiprivate room was 11.3 percent. Imaging, such as CT scans, and other advanced technological services contributed just 4.9 percent. The significant growth in the mean cost per discharge of supplies and devices suggests they should be examined more closely.

Caroline Steinberg, vice president of Trends Analysis for the American Hospital Association, said the group supports comparative effectiveness research to determine whether new drugs and devices are both clinically and cost effective. 

“This is an area where more research is needed,” she added. “And as for increased use of the intensive care unit, that is consistent with the trend towards older and sicker patients.”

Maeda added that payers might consider negotiating discounts in areas of care and cost that are growing quickly.

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Health Services Research is the official journal of the Academy Health and is published by John Wiley & Sons, Inc. on behalf of the Health Research and Educational Trust. For information, contact Jennifer Shaw, HSR Business Manager at (312) 422 2646 or jshaw@aha.org. HSR is available online at http://onlinelibrary.wiley.com/journal/10.1111/(ISSN)1475-6773/

Maeda JL, Raetzman SO, Friedman BS. (2012). What hospital inpatient services contributed the most to the 2001 to 2006 growth in the cost per case? Health Services Research. Online Aug. 29.

Tags for this article:
Health Care Cost   Medical/Hospital Practice  



Comments on this article
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Ken Maddock says
August 30, 2012 at 10:23 AM

I'm glad that people are starting to focus on things other than the overuse of tests and provider inefficiency as the drivers of healthcare costs. While there is undoubtedly additional room for improvement in those areas, the costs providers have to pay for equipment, supplies, services, and software are a very large part of the reason for increased healthcare costs. Providers of equipment, supplies, services, and software charge what the market will bear, and the market will bear a lot because healthcare providers have few options, none of them inexpensive. It baffles me why so many people fail to see this as a problem. I want to be clear that I'm not opposed to those who provide services, equipment, software, and supplies making a profit. Obviously they need to make a profit to remain in business. It's the inequity between healthcare provider margins and supplier margins that have to be addressed somehow. The current model isn't sustainable.

Joleen Chambers says
August 30, 2012 at 12:52 PM

I have been a Patient Advocate for the past four years. I have testified twice at FDA/CDRH Town Hall meetings (TX-3/10/11 and CA 9/22/11 about the high number of failed implanted medical devices. When these devices fail, they place patients in medical and legal purgatory because of poor federal public policy. The FDA approves most of them through 510(k) that does not require clinical testing or post-market follow up. The IOM report 7/29/11 stated that this practice must end. There is no product warranty and no objective information that allows patients to make a good decision. Furthermore, the device industry is powerful politically and has entitlements that prevent patients from accessing trial by jury and fair compensation. The FDA/CDRH Orthopedic Panel Patient Representative is non-voting.

Binseng Wang, ScD, CCE says
August 30, 2012 at 4:38 PM

I am happy to see that healthcare researchers are now willing to confront the reality that most of the technology-related cost rises are not due to the deployment of medical equipment but the increase dependence on implants and disposable devices and supplies. In a study my colleagues and I published in 2008 (Wang et al., Financial Impact of Medical Technology, IEEE Eng Med Biol magazine, 27(4):80-85, 2008), we found that ~4% of mean per-discharge cost in acute care hospitals are for implants and prosthetic devices, while ~9% is for medical supplies (single-use or single-patient-use devices), and only 5% is for drugs. In comparison, the depreciation of medical equipment plus its maintenance and management cost is only ~2.7%. In other words, it is incorrect to point to major imaging equipment such as PET, MRI or CT as the poster child of why healthcare costs are rising uncontrollably.

From our and Dr. Maeda’s studies, it is easy to understand why WHO reported that the largest medical device company in the world is not one that makes sophisticated imaging equipment but one that makes cotton balls and Band-Aids, as well as implants. This also helps to understand why Mr. Maddock is seeing explosive rise of equipment maintenance and repair costs, as manufacturers try to compensate the decreasing volume of equipment sales by shifting their attention to support costs.

Critical and aggressive effectiveness and efficiency studies based on outcomes are urgently needed to help decision makers at all levels make better choices so healthcare can be safer, better and more cost effective.