How Inefficient Hospitals Drive Healthcare Costs Up

There are many differing opinions in the healthcare debate. But, there’s one thing we can all agree on: healthcare in the US costs too much. US healthcare costs about $7300 per person per year, which is about 2.5 times more than other industrialized nations. There’s plenty of blame to go around for why it’s so expensive here, but a fair share of that blame goes to hospitals for their inefficiency and their need to one up their competition. Here are three ways that our hospitals are driving up the costs of healthcare.

1. They make mistakes. Patient errors cause complications and death, which means that hospitals and doctors must carry more malpractice insurance, which drives up costs. Mistakes also increase the length of hospital stays and cause readmissions for the same illness, both of which are extremely inefficient. More care taken to reducing patient errors can reduce costs considerably. Hospitals who have switched to electronic charts and prescriptions have seen marked improvement in efficiency and fewer patient errors.

2. They spend lots of money to compete. If the hospital down the street just spent a bundle on a new, high tech piece of diagnostic equipment, you can bet that all the other surrounding hospitals will do the same. Rather than cooperating and sending patients who need the procedure to the hospital who can already provide it, they’ll buy the equipment in order to be able to grab the patients who need the procedure. A more cooperative system, where one hospital buys the new and expensive equipment in one diagnostic area and another does so in another area would decrease costs for everyone, while still giving patients the benefit of technology. This allows each hospital to have a niche, so that they can attract an adequate number of patients.

3. They treat too many people in the ER. When the ER is flooded with patients who really shouldn’t be there, everybody suffers and costs go through the roof. Lines are long, waits are ridiculous and the real emergency patients may not get treated quickly enough. And, while there are many reasons that people come to the ER who shouldn’t, one of them is lack of simple clinics and urgent care centers that could treat many problems that send people to the ER for lack of another alternative. The most efficient hospitals offer these clinics that don’t’ require appointments to help keep their ERs running more efficiently. These clinics also help encourage people to seek treatment earlier, when illnesses are more easily treated. This can result in fewer hospital visits required overall, which reduces the overall cost of healthcare.

It’s up to all of us to improve our healthcare system. Healthcare providers, insurers, government and the voters must all work together to create a new healthcare system that works for all of us and is affordable to more people. Hospitals can do their part by ensuring that they use their resources wisely and create programs that increase efficiency and the level of patient care.

Mary E. Ward blogs about how to choose among MHA programs.