Catastrophic Medical Malpractice Payouts in the U.S.

An analysis of medical malpractice payouts of $1 million or more over a seven year period was recently published. It found that these catastrophic medical malpractice awards accounted for nearly 8% of all paid malpractice claims, and were most often associated with infants; quadriplegia, brain damage, or lifelong care; and anesthesia.

Annual catastrophic payouts averaged $1.4 billion, but this figure represented only 0.05% of total health expenditures in the U.S.  The study was based on the National Practitioner Data Bank that includes details on malpractice payouts on behalf of physicians or other individual providers; malpractice claims against hospitals or other institutions are not covered by the Data Bank. Consequently, total national payouts may be underestimated by about 20%, according to the researchers.

The researchers conclude that defensive medicine rather than ‘frivolous’ malpractice awards may be the more costly concern. According to Marty Makary, one of the Johns Hopkins researchers, “It is not the payouts that are bankrupting the system — it’s the fear of them.” He estimates defensive medicine costs $60 billion annually for too many tests and procedures.

Sources:

Bixenstine PJ and others. Catastrophic medical malpractice payouts in the United States. Journal for Healthcare Quality, published first online, Mar. 29, 2013, at http://onlinelibrary.wiley.com/doi/10.1111/jhq.12011/abstract

“Catastrophic malpractice payouts add little to health care’s rising costs. Johns Hopkins Medicine news release, May 1, 2013. http://www.hopkinsmedicine.org/news/media/releases/catastrophic_malpractice_payouts_add_little_to_health_cares_rising_costs

Posted by AHA Resource Center (312) 422-2050, rc@aha.org

2012 prescription spending: $2262 per Medicare patient

 In 2012, this was the breakdown of overall prescription drug spending by patient’s type of coverage:

• $2262.32 Medicare (notice that this is about 2.5 times commercial patients)
• $  846.85 Commercial
• $  450.58 Medicaid

These figures are “per member per year” and based on Express Scripts’ database.  This is a free report available full text on the web.  It includes an interesting recap of key events affecting pharmaceutical utilization and expenditures from 1993 (the first year that this report was published) to the present.  In 2012, for instance, the “patent cliff” occurred, in which patents expired on a large number of prescription drugs.  This will have a beneficial effect on health care costs, since these previously patent-protected drugs will be challenged by lower priced generics.

Source: Express Scripts.  2012 Drug Trend Report, Mar. 2013.  Click here for full text: http://drugtrendreport.com/docs/ExpressScripts_DTR_0320.pdf Posted by AHA Resource Center (312) 422-2050, rc@aha.org

Biomedical research funding is in trouble

Ted Kennedy is dead.  Arlen Specter is dead.  With the passing of these Senators and the departure of other Congressional leaders who consistently championed funding for biomedical research, there is concern for the future.  In this brief overview article, Dr. Emanuel, of the Perelman School of Medicine at Penn, takes a high-level look at the various reasons why research funding from the National Institutes of Health is drying up and makes a few suggestions about what might be done about the situation.  He describes the vicious cycle of research success — the development of new (expensive) clinical interventions drive up the cost of health care, which then competes with future research funding. 

Source: Emanuel, E.J.  The future of biomedical research.  JAMA, Apr. 4,2013.  Click here for article: http://jama.jamanetwork.com/data/Journals/JAMA/0/jama.2013.2096.pdf Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

National Trend Data on Hospital Uncompensated Care, FY1980-2011

The American Hospital Association has updated its annual trend data on hospital uncompensated care. In fiscal year 2011, hospitals provided $41.1 billion of uncompensated care, including both bad debt and charity care. This representeded 5.9% of overall hospital expenses.

Source: Uncompensated hospital care cost fact sheet. American Hospital Association, Jan. 2013. http://www.aha.org/content/13/1-2013-uncompensated-care-fs.pdf

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

ICU costs are more than twice that of non-ICU inpatient care

Costs in intensive care units in four Banner Health (Phoenix) hospitals in the last half of 2007 were studied.  The daily ICU direct variable cost was found to average $1,597 compared to $683 for other inpatients not in ICU.  The average cost of the entire stay was $6,488 for the ICU, compared to $2,833 for other inpatients.  The types of expenditures were also analyzed:

ICU spend by type

• 56.2% labor
• 15.9% pharmacy
• 8.9% respiratory therapy
• 7.3% lab/blood

The authors also analyzed the difference in cost between low-acuity, mid-acuity, and high-acuity ICU patients. 

What I like about this article: It’s always interesting to see data on cost and utilization of intensive care units. 

Source: Dahl, D., and others.  The high cost of low-acuity ICU outliers.  Journal of Healthcare Management;57(6):421-433, Nov./Dec. 2012.  Click here for more information: http://www.biomedsearch.com/article/high-cost-low-acuity-ICU/311499617.html  Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

 

Who’s paying for the nation’s $2.6 trillion health care tab?

As a nation, the U.S .spent nearly $2.6 trillion on health care in 2010. Who’s picking up the tab? Here’s the percent paid by the public and private sectors:

Private sector total: 55.1%

• Business: 20.6%
• Household: 28.0 %
• Other: 6.6%

Public sector total : 44.9%

• Federal government: 28.6%
• State/local government: 16.2%

Source: Martin AB and others [Centers for Medicare & Medicaid Services]. Growth in US health spending remained slow in 2010; health share of gross domestic product was unchanged from 2009. Health Affairs, Jan. 2012. http://content.healthaffairs.org/content/31/1/208.abstract

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

Trends in Children’s Health Care Costs and Utilization

This report is the first of its kind to look at medical cost and utilization trends for some 41.4 million children [aged 18 and under] covered by major employee-sponsored group health plans. The analysis excludes uninsured children and those kids covered by individually-purchased health plans, Medicaid, CHIP, and other public insurance plans.

Here are some findings from the report:

• Spending on pediatric health care by employer-sponsored health insurance reached nearly $88 billion in 2010.
• Health expenditures for children with employee-sponsored insurance coverage rose faster than any other age group. Per capita costs rose nearly 19% from 2007-2010, reaching $2123 in 2010.
• Family out-of-pocket spending per insured child was $371 in 2010, an increase of 7% over the previous year.
• Children’s health expenditures were distributed among these major categories in 2010: professional procedures 40.3%; outpatient 28.9%; prescription drug 22.2%; and hospital inpatient 13.6%.
• Rising prices accounted for most spending increases.
• The average emergency room charge for employer insured children was $923 in 2010, a 35% increase from $684 in 2007. While ER use for this group declined during this timeframe, service intensity increased, accounting for about 9% of the overall price growth.

Source: Trends in children’s health care costs and utilization, 2007-2010. Health Care Cost Institute, July 2012. http://www.healthcostinstitute.org/childrensreport

Posted by the AHA Resource Center, (312) 422-2050, rc@aha.org

Economic impact of the hospital on the community

A hospital has a direct economic impact on the local community based on the wages paid to employees and purchases made from local vendors.  But there is also a larger ripple effect of purchases made locally by employees and by businesses purchasing goods and services from other businesses.  There is a genre of hospital and health services economic impact studies — call us if you’d like us to help you find them!  This one was done for hospitals in Kansas.  In 2011, Kansas hospitals employed about 74,000 individuals and had an “employment multiplier” of 1.78 — meaning that for every hospital job, another 0.78 jobs were supported.  Kansas hospitals were found to have an “income multiplier” of 1.48 — for every dollar of income generated by hospitals, another $0.48 was generated in other businesses.

Source: Leatherman, John.  The Importance of the Health Care Sector to the Kansas Economy.  Manhattan, KS: Kansas State University, Jan. 2012.  Click here for full text: http://krhw.net/assets/docs/Economic%20Impact%20Reports/State%20of%20Kansas%20Health%20Care%20Impact%20Report.pdf  Posted by AHA Resource Center, (312) 422-2050 rc@aha.org

Health Care Costs: a Primer

As policymakers struggle with how best to manage the nation’s health care costs, this primer provides useful overview data and discussion on the growth in health spending since 1970 and its impact on both businesses and families. The report addresses these questions:

• How much does the U.S. spend on health and how has it changed?
• How does U.S. health spending compare with other countries?
• How does health care spending vary by person?
• What do health expenditures pay for and who pays for them?
• How do health care costs impact families and employers?
• Why are health care costs growing faster than the economy overall?
• What can be done to address rising costs?

Source: Health care costs: a primer – key information on health care costs and their impact.  Kaiser Family Foundation, May 2012. http://www.kff.org/insurance/upload/7670-03.pdf. Downloadable slides at http://facts.kff.org/results.aspx?view=slides&detail=29

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org

National health spending forecasts through 2021

Office of the Actuary staff at the Centers for Medicare and Medicaid Services have released their annual projections on national health expenditures through 2021. Here are some highlights:

• The nation’s spending on health care will grow from nearly $2.5 trillion in 2009 to $4.8 trillion in 2021. Over $776 billion [31.1%] went for hospital care in 2009, and by 2021, the hospital portion will grow to $1.5 trillion [31.3%].
• Health expenditures accounted for 17.9% of the nation’s GDP, and are forecast to rise to 19.6% of GDP by 2021.
• National health spending per person was $8,149 in 2009 and will rise to $14,203 by 2021.
• For 2011-13, national health spending is expected to grow at an annual rate of 4%, up slightly from the historically low 3.8% rate of 2009. In 2021 the annual growth rate is projected to be 6.2%.
• Use of health services remained low in 2011, according  to preliminary data, and is expected to remain low through 2013.
• Health spending will accelerate by 7.4% in 2014 based on major coverage expansions from the Affordable Care Act.
• Government – federal, state, and local – spending  on health care will grow from 46% of all national health expenditures in 2011 to almost 50% in 2021.

The spending projections also break-out data for physicians, dentists, and other professional services; home health care; nursing care facilities and continuing care retirement communities; retail sale of prescription drugs, durable medical equipment, and other non-durable medical products; government administration; net cost of health insurance; government public health activities, investment in research and in structures and equipment; and other health, residential, and personal care.

Spending is further analyzed by funding source, including out-of-pocket; private health insurance; Medicare; Medicaid by federal and state government support levels; other health insurance programs; other third pay payers and programs; and investments.

Sources:

Keehan SP and others. National health expenditure projections: modest annual growth until coverage expands and economic growth accelerates. Health Affairs 31(7): 1-7, July 2012 [Online first, June 14, 2012]. http://content.healthaffairs.org/content/early/2012/06/11/hlthaff.2012.0404.abstract

National health expenditure projections 2011-2021. US Center for Medicare and Medicaid Services, accessed June 22, 2012 at http://www.cms.gov/Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NationalHealthAccountsProjected.html

Posted by AHA Resource Center, (312) 422-2050, rc@aha.org