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HOSPITAL BUDGETS: Hospital spending by category 2015

The following data are based on an analysis of the Centers for Medicare and Medicaid Services (CMS) 2015 inpatient market basket update projections.  A base year of 2010 weights were used.

Hospital Spending (by percent)

  • 59.1  Wages and benefits
  • 14.1  Other products (for example, food, medical instruments)
  •   9.1  Professional fees
  •   6.9  Prescription drugs
  •   3.7  All other: labor intensive
  •   3.7  All other: non-labor intensive
  •   2.1  Utilities
  •   1.2  Professional liability insurance

Source: American Hospital Association. (2017, February). The cost of caring. Click here: http://www.aha.org/content/17/costofcaringfactsheet.pdf  Posted by AHA Resource Center (312) 422.2050 rc@aha.org

Hospital cost drivers, market power, and relationship to hospital prices

A new report looks at hospital cost trends, why the cost drivers may vary among hospitals, and the relationship of those costs to hospital prices. Is market power due to a lack of competition a key factor for pricing, as some claim? This study from Compass Lexecon finds hospital prices are most directly related to the costs of providing patient care, with rising labor expenses over the past decade accounting for a significant proportion of overall hospital costs. Key factors found that account for price differences among hospitals include case mix, teaching intensity, Medicare and Medicaid payer mix, regional wage and other cost differences, uncompensated care, and patient demographics. Other  unexplained factors are discussed, but the authors conclude they found no basis to attribute these to hospital market power.

As antitrust concerns are raised with the formation of  accountable care organizations, medical homes, and other types of clinical integration to improve the quality of care and control costs, this report provides valuable perspective.


Guerin-Calvert ME and Israilevich G. Assessment of cost trends and price differences in U.S. hospitals. Washington, DC: Compass Lexecon, March 2011. http://www.aha.org/aha/content/2011/pdf/11costtrendspricediffreport.pdf

Related documents:

Cost trends & price differences; Assessment of cost trends and price differences for U.S. hospitals refutes unsupported claims of market power. Chicago: American Hospital Association, March 2011. http://www.aha.org/aha/content/2011/pdf/11costtrendspricediffppt.pdf

Guerin-Calvert ME and Israilevich G. A critique of recent publications on provider market power. Washington, DC: Compass Lexecon, Oct. 4, 2010. http://www.aha.org/aha/content/2010/pdf/100410-critique-report.pdf

Fast Facts on US Hospitals

Updated fast facts on the number of US hospitals are now available from the just-released 2013 AHA Hospital Statistics. The statistics reflect fiscal year 2009 data collected during 2010 through the AHA Annual Survey.

Sources: Fast facts on US hospitals. American Hospital Association Resource Center, Jan. 3, 2013.  http://www.aha.org/research/rc/stat-studies/fast-facts.shtml

2013 AHA hospital statistics. Chicago: Health Forum, an American Hospital Association company, Jan. 2013. Purchase details at http://www.ahadata.com.