Fact Check: How hospitals continue to drive health care spending

Nicole Longo
Nicole Longo August 21, 2019

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There is a lot of talk about health care costs in the United States that is mostly centered on prescription medicine spending, overlooking the largest share of U.S. health care spending – hospital care. And hospital spending continues to grow as their prices increase.

Studies have shown hospitals mark up medicines up to 500% of their cost, with nearly one in five hospitals marking up medicine prices by 700% or more. But prescription medicines are just one piece of the hospital cost picture. Data recently featured by Axios point out how much more we spend on hospital care compared to retail prescription medicines.

Fact: The United States spends three times more per person on hospital care than on retail prescription medicines.

Hospital Care Chart5[2]

These data, coupled with a recent analysis from United Health Group, highlight how hospitals are the primary drivers of health care spending. United Health Group found that prices for inpatient care charged by hospitals increased significantly from 2013 to 2017, far surpassing prices paid to independent physicians for the same care. According to the analysis, hospital prices increased by 4.5% per year over this period while independent physician prices increased just 2.5%.

Rather than looking at one piece of the health care system, we need a robust discussion about the whole system and ways we can rein in health care spending. Looking at hospital costs is a critical place to start. Learn more at LetsTalkAboutCost.org.

Topics: Hospitals, Let's Talk About Cost