Health Care

Expect increased expenditures

West Michigan is losing its edge in low-cost health care.

January 16, 2015
Text Size:

West Michigan employers will continue to face challenges when it comes to health care.

Grand Valley State University researchers discussed with the Business Journal the 2015 Health Check: Analyzing Trends in West Michigan report. The annual report identified a number of health-related trends and regional issues, such as: an increase in health care expenditures and a number of residents continue to make unhealthy lifestyle choices.

GVSU economics professor Paul Isely said one of the interesting findings this year revealed an increase in health care expenditures. “The expenditures here in West Michigan are growing pretty quickly and fast enough that, relative to other cities, we are getting more expensive now,” said Isely. “We are seeing increases in facilities’ costs and increases in Blue Book value for private provider, condition provider data. We aren’t the highest cost, but we are no longer the lowest cost place to get health care.”

The 2015 Health Check report indicated hospital expenses and total hospital expenses per bed increased 108 percent and 78 percent, respectively, between 2003 and 2012 in Grand Rapids, while comparison cities saw expenses grow 68 percent and 65 percent, respectively.

With the low admittance rate for Grand Rapids residents and, on average, a shorter hospital stay than comparison communities, the report noted there is “little evidence costs are the result of changes in population health or increased service intensity.”

“It doesn’t appear to be that we are less healthy; it doesn’t appear to be that we are going to hospital more often; it doesn’t appear that we are doing more complicated procedures — we are doing some more complicated procedures, but on average we aren’t,” said Isely. “It appears it would perhaps be a few other issues.”

Isely attributed the rise in cost to a couple of potential influencing factors such as the increase and use of technology and the decrease in competition. Using the Herfindahl-Hirschman Index, the Grand Rapids Hospital Referral Region has 1.6 times the market concentration compared to the Detroit region, which can make it more susceptible to increasing costs.

“Every academic study that has looked at this in the hospital setting I have seen shows that decreases in competition are accompanied by increases in cost,” said Isely. “I don’t see us accelerating away in cost. We probably have a little bit more to go, but we will probably start moving back toward the U.S. trend.”

The correlation between rising health care costs and attracting new businesses potentially could influence a company’s decision to invest in the area, according to Isely.

“Certainly, going from a low-cost provider to an average, to a slightly above average cost provider would add in to some companies’ belief structure about whether they should be here in West Michigan or not,” said Isely. “It is only one part of the entire package, but it now creates what used to be a positive to something that is neutral when companies are making their decision.”

Dr. Karen Kennedy, family practice physician at the Browning Claytor Center at Mercy Health Saint Mary’s, said there can be a number of factors contributing to the cost of health care, including miscommunication, mistrust and other social determinates impacting patients’ lives outside of the 15-minute patient-physician office visit.

“(Patients) are exposed to the rest of the world for three months before seeing me,” said Kennedy. “So there is confusion between what the doctor says and then what you hear on some commercial. I think that really drives why health care is so expensive. There is miscommunication, there is some distrust with the medical community, there might be literacy issues, in general, in the health field, and a lot of patients need to love themselves.”

In the health care overview section of the report, researchers noted a large number of residents are making unhealthy lifestyle choices: 23 percent do not participate in leisure time physical activity; 20 percent reportedly smoke; 19 percent binge drink; and 30 percent didn’t participate in a routine checkup in the last year.

With a number of the lifestyle choices trending slightly in the wrong direction, Isely said it is not enough to show a major trend, but it is still an issue.

“We are certainly seeing a continued move toward people in West Michigan being a little less healthy with their choices, so they are not exercising enough, gaining a little too much weight, smoking and drinking more than they should,” said Isely.

Pulling data from the Michigan Behavioral Risk Factor, the study indicated 17 percent of area residents are in poor or fair health as a result, which directly impacts health care spending for chronic conditions, such as diabetes. Routine testing for diabetes could save up to $32.7 million in medical costs if all diabetic West Michigan residents participated, according to the report.

“Prevention is not a sexy term, and more than anything else in this country, we need to talk more about it,” said Kennedy. “We talk about health care, but it is really chronic health care or health in terms of disease. We are treating disease; we are not doing as much in terms of prevention.”

Other 2015 Health Check findings include: In the four-county region, there are a larger number of people between 45 and 64 than between 20 and 34, which can create burdens on employer-sponsored health care. Also, improved maternal health combined with a 20 percent decline in low birth-weight babies would result in $13.4 million in annual savings in West Michigan.

“We have a lot of new people coming into the world … and we are finding there is a lot of premature birth and a lack of prenatal care,” said Kennedy in reference to the added section focused on women’s health. “A fair number of prenatal births can occur because of addiction and use of illicit medications.” She noted another savings contributor is that when women are involved in health care, the rest of the family tends to be involved in health care.

The study was led by GVSU economics professors Isely, Sonia Dalmia with the collaboration of Seidman College of Business colleagues Kevin Callison and Leslie Muller. The team aggregated data from a variety of sources including Priority Health, Blue Care Network, Blue Cross Blue Shield of Michigan, American Hospital Association, Bureau of Labor Statistics, Center for Disease and Control, Institute of Medicine of the Academies and Michigan Health and Hospital Association.

The 2015 Health Check provides a trend analysis of major issues for the West Michigan region and includes: Knowledge Foundations, which comprises graduation and jobs, and medical patents; Health Care Trends, including demographics, a health care overview and a section on women’s health; and Economic Analysis, with benchmarking medical services, results from a physician survey in response to the Affordable Care Act, and the cost analysis of major medical conditions.

Recent Articles by Rachel Weick

Editor's Picks

Comments powered by Disqus