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Study: Health-Care Savings Lie Outside the Hospital Room

Photo: A study by Physicians for a National Health Program found the U.S. spends almost four times as much on administrative costs as neighboring Canada and significantly more than other countries with single-payer systems. Photo courtesy: Norbert Kaiser
Photo: A study by Physicians for a National Health Program found the U.S. spends almost four times as much on administrative costs as neighboring Canada and significantly more than other countries with single-payer systems. Photo courtesy: Norbert Kaiser
September 11, 2014

TALLAHASSEE, Fla. – As debate over health care reform and the Medicaid expansion continues in Florida and the rest of the nation, one solution to the problem of health care costs could lie in how much hospitals spend on nonmedical-related expenses.

A study released this week by Physicians for a National Health Program found that nationwide hospital administrative spending totals $667 per capita in the U.S., compared with $158 in Canada.

Dr. Steffie Woolhandler, one of the study’s authors, says overhead costs increase in for-profit versus nonprofit Florida hospitals.

"I think Florida has allowed for-profit hospitals to flourish,” she maintains. “Florida has also encouraged a lot of for-profit HMOs and insurance plans to proliferate, and none of that lowers costs – and in fact our study indicates that that would raise administrative costs."

The study found no evidence that higher administrative costs in the U.S. lead to better care or other benefits.

Additionally, bureaucratic costs rose from 23 percent to 25 percent from 2000 to 2011.

Billing costs are one large contributor, according to the report, but it notes that competition and marketing expenses to drive profits also are driving up costs.

Woolhandler says one solution could lie in a simplified payment system.

The plan called single-payer reform where payments would come from a public fund, much like the model of fire and police departments.

"Hospitals have to collect co-payments and deductibles from virtually every patient who rolls through the door,” Woolhandler points out. “So the payment system imposes a tremendous amount of complexity on hospitals in the United States."

Woolhandler estimates that if the U.S. switched to a single-payer system, the reform could save $150 billion annually.

Stephanie Carson, Public News Service - FL