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Zack Hutchins
Director of Communications

October 23, 2002

Study: Technology and hospital costs drive health-cost hikes

Inpatient hospital costs outstrip pharmaceutical costs as a primary driver of health-care costs, new research released Oct. 23 concludes.

"As widely reported, 79 percent of healthcare costs are driven by hospital and physician costs," the Blue Cross and Blue Shield Association (BCBSA) said in a release announcing the research.

"While pharmaceuticals still are a major cost contributor-making up about 21 percent of the overall increase-inpatient hospital costs are outstripping pharmaceutical costs as a primary driver of healthcare costs," it added.

BCBSA said that 19 percent of escalating hospital costs are directly related to the use and deployment of medical technology, and that 18 percent of the increase in hospital costs is being driven by rising provider consolidation.

"Medical technology can and does benefit patients," said Scott P. Serota, BCBSA president and CEO. But advanced technology will mean little "if no one can afford it.

"It is imperative that investments in new technology be made based on sound medical evidence."

The research was done by experts from the University of Southern California, the Lewin Group and HealthShare Technology in separate studies.

"The good news is the research points out that the leading causes of healthcare cost increases are largely actionable," Serota said. "But, if left unchanged, these key drivers will further threaten access to affordable healthcare for millions and could add to the surging numbers of uninsured Americans."

The study echoes a report published Sept. 25 by the Center for Studying Health System Change (HSC). That study showed that spending on health care jumped 10 percent in 2001, the first double-digit increase in more than a decade, and that increases in costs of hospital care were driving the trend.

The study showed that spending on inpatient and outpatient hospital care climbed 12 percent in 2001, accounting for more than half, or 51 percent, of the overall health care spending increase.