Should We Worry about Hospitals' High Administrative Costs?

Abstract

The article questions whether or not the health community should worry about hospitals' high administrative costs in the U.S. The author reports that with a health care world of negotiated budgets and cost-based reimbursement, it's important for those who pay the bills to focus on the individual cost items that are presented for reimbursement. Since the 1970s, Congress, concerned about growing costs, has attempted various reforms but finally abandoned cost-based reimbursement in 1983. Hospitals would receive a total payment per admission on the basis of the expected cost of treating a diagnosed illness. The author reports that since 1994, the annual rate of increase in hospital expenses per admission has been consistently below the level of inflation.