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Healthcare Costs Up 47.2% Despite Little Change in Utilization

Spending on medications, specialists, ED visits, and hospitalization contributed to a significant rise in healthcare costs.

Healthcare costs increased while utilization and number of individuals using healthcare services persisted, a study showed

Source: Thinkstock

By Jacqueline LaPointe

- Healthcare costs increased 47.2 percent from $246 per individual per month in 1996 and 1997 to $362 per individual per month in 2011 and 2012 despite healthcare utilization and the number of individuals seeking care remaining relatively unchanged between the time periods, a recent Annals of Family Medicine study revealed.

“Collectively, the study’s findings therefore suggest that the increases in expenditure have little to do with an increase in the number of individuals receiving services or the total volume of services, but much to do with the cost of treating the same number of individuals with the same number of services,” the authors wrote.

Using Medical Expenditure Panel Survey data from 1996 to 1997 and 2011 to 2012, researchers from Ohio Health found that the healthcare cost increases stemmed from higher spending on prescription drugs, specialty physicians, emergency departments visits, and inpatient hospitalizations. Key findings from the study included:

• Healthcare expenditures for prescription drug use rose by 159 percent between the periods studied and utilization increased by 45 percent, while the number of individuals reporting prescription drug use remained stable between the periods

• Almost all of the healthcare cost increases for outpatient physician use between the periods analyzed related to specialty physicians, with specialist costs rising from an average of $45,687 per 1,000 individuals per month in 1996 and 1997 to $62,450 by 2011

• Utilization and number of individuals using specialty physicians for care remained consistent

Emergency department use did not change according to individual visits or overall utilization, while healthcare costs for the services increased by almost $6,800 per 1,000 individuals per month between the periods

• Inpatient hospitalization use also remained consistent in terms of individual visits and overall utilization, but costs grew by almost $13,200 per 1,000 individuals per month

Researchers noted that the significant growth in prescription drug spending and utilization came from greater use of expensive prescription drugs.

In contrast, primary care providers saw utilization rates and the number of individuals using their services decrease. Primary care utilization significantly dropped by about 15 visits per 1,000 individuals per month, while the number of individuals fell by 9.3 visits per 1,000 individuals per month.

Despite a decline in primary care use, healthcare costs for the services remained flat, with just a $349 increase per 1,000 individuals per month between the periods analyzed.

Study authors pointed to alternative communication pathways, such as personal health record access, as the reason behind primary care use declines.

They also remarked that the study’s findings may indicate that CMS-run alternative payment models targeting primary care providers and services may not be working.

“The combination of flat costs, decreasing use of primary care, and a recent evaluation of the models casts doubt on the potential success of these primary care redesign efforts through the Centers for Medicare and Medicaid Services,” the study stated.

“To more explicitly state this point, primary care could optimally reduce the stable ED [emergency department] utilization, specialized physician visits, and inpatient hospitalizations within the population that are associated with a primary care physician, but primary care has little control over either the increasing expenditures when an individual is in an alternative location or the largely stable individual and utilization frameworks that have persisted over the course of this study,” the study continued.

However, primary care could influence prescription drug use and costs, researchers added.

To reduce healthcare cost trends, researchers suggested that healthcare systems focus on upstream improvements rather than relying on downstream efforts to reduce costs.

Upstream initiatives include efforts to improve environment, housing stability, transportation access, and availability of healthy food and safe spaces, explained former Acting Assistant Secretary for Health Karen DeSalvo and Andrea Harris in an accompanying editorial.

They advised healthcare providers to address the social needs of their patients to realize greater healthcare cost savings.

“Providing the best quality care for a patient with COPD [chronic obstructive pulmonary disease] in the clinical setting is an important goal,” they stated as an example. “But if that patient cannot afford the medication or does not have access to transportation for their follow-up care, their disease will quickly become uncontrolled, leading to worse health outcomes and higher utilization-related costs.”

Healthcare stakeholders, as well as community leaders, should move away from a medical model to a public health model, DeSalvo and Harris suggested.

“To improve overall population health, we will need to embrace disruptive models of health that address health care needs as well as the social factors and enable leaders to build healthier communities that support affordable, equitable health for all,” they concluded.


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