Analysis: Patients here pay much more
Colorado hospitals charge their insured patients significantly more for inpatient and outpatient care than hospitals in five other jurisdictions studied, a report released Thursday found.
The analysis reviewed health care costs in Colorado, Minnesota, Utah, Oregon, Maryland and St. Louis. It found the price of inpatient care at Colorado hospitals in 2016 was 31 percent higher than the average for the six jurisdictions reviewed. The cost of outpatient care in Colorado that year was 15 percent higher than the average for all the jurisdictions.
The study was conducted by the Portland, Maine-based Network for Regional Healthcare Improvement.
“This year’s report shows that Colorado still has some significant cost-savings opportunities related to the price of health care services in our state,” said Ana English, the president and CEO of the Colorado-based Center for Improving Value in Health Care, a nonprofit that provided Colorado claims data for the study. “Many efforts are underway in Colorado to curb health care costs, and this
new data shows that we need to accelerate those efforts in certain areas in order to make health care affordable for Coloradans.”
All of the jurisdictions analyzed for the study had robust regional health care collaborative entities in place with access to claims data. Those entities volunteered to participate. Since the inception of the project in 2013, 12 additional regions have agreed to contribute data for studies that were more limited in geographic scope, according to participants. The study released Thursday adjusted for differences in the underlying health status of the populations surveyed.
The release of the report Thursday follows recent concern expressed by key legislators and officials at the Colorado Department of Health Care Policy and Financing over what Colorado hospitals are charging and how rapidly they are building. HCPF officials have pointed out that from 2009 through 2016, capital expenditures for the hospital industry in Colorado were higher than all states but Alaska. Kim Bimestefer, executive director of HCPF, which oversees the state’s Medicaid program, has challenged hospitals to reduce their pace of construction, saying it is unnecessarily duplicating services and driving up prices.
The Colorado Hospital Association has pushed back. Hospitals are building in areas where rapid population growth will demand services, association officials say. Hospital executives add that they must build to a level that will take into account emergencies, such as a flu epidemic.
Colorado Hospital Association officials were quick to question the results of the pricing study, pointing out that one of the jurisdictions in the analysis, Maryland, restricts hospitals to charging a set price for both Medicare patients and the privately insured. Since Colorado doesn’t have the same system as Maryland, “dramatic price differences” occur, said Julie Lonborg, spokeswoman for the association.
“This is an apples-too-ranges analysis at best and is based on a small number of handpicked states,” Lonborg added. “While there may be lessons within the analysis, the limited data set does not put Colorado’s health spending in context.”
The cost issue has generated bipartisan concern. Both State Rep. Bob Rankin, a Republican from Carbondale, and State Sen. Kerry Donovan, an Eagle County Democrat, have said the high cost of health care is pushing the cost of insurance in the areas they represent in western Colorado to unsustainable levels. They both predict the cost of insurance in their region will be a top issue in the upcoming legislative session. Gov.-elect Jared Polis also made the high cost of health care a centerpiece of his successful gubernatorial campaign.
The pricing study released Thursday found that Colorado’s hospital costs were increasing faster compared with the other jurisdictions.
In 2015, the inpatient hospital costs in Colorado were 16 percent higher than the average costs for the six jurisdictions. Outpatient costs in Colorado in 2015 were 4 percent higher in Colorado than the multi-jurisdiction average.
Hospital care wasn’t the only category of health care with higher costs in Colorado. Pharmacy costs and professional services costs in Colorado were 5 percent and 7 percent higher respectively in 2016 in Colorado than the multijurisdiction average.
The prices hospitals charge is only one factor in how much health care costs a state. How much services are used is also a factor. Once health care usage was factored in along with pricing, the total cost for all four categories of care surveyed was 19 percent higher per patient in Colorado than the average for all the jurisdictions, the study found. Colorado was the only jurisdiction with higher than average prices in all categories of care. Of the states surveyed, health care costs were lowest in Maryland, which restricts what hospitals can charge for services. The researchers found Maryland’s costs for all categories of care were 20 percent lower than the average for all the jurisdictions.
The Center for Improving Value in Health Care estimated that $141 million in annual savings would be realized in Colorado if total health costs were reduced to the multistate average.
Robert Smith, executive director of the Colorado Business Group on Health, which is pushing to cap hospital costs in the state, said he hopes the study will push legislators and Polis to address the high cost of health care.
“With $141 million, you could pay for a lot of things, including paying for more primary care,” Smith said. “You could do better in the rural communities on mental health. We are completely a high-priced state when it comes to hospital costs.”
The study released Thursday on pricing further found that there is wide variation in what insured beneficiaries are charged for care in Colorado. Of nine regions in the state that were analyzed, health care costs far more in the state’s mountainous west region. The combined cost for inpatient care, outpatient care, professional services and pharmaceuticals was 29 percent higher in the mountainous west than the statewide median cost, the study found. That region also has a 7 percent higher rate of utilization than the statewide median.
The result of those differences is that there is a wide difference in costs charged per beneficiary. In Colorado Springs, the average monthly health care cost per beneficiary is $335. In contrast, the average health care cost per beneficiary in the western region is $584.