Health Care and Higher Education

Hospital admissions cost more

Report finds the $30,000 average cost in Grand Rapids is about $3,000 greater than Detroit.

February 15, 2019
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Hospital admission costs in Grand Rapids are continuing to climb and still are higher than in neighboring areas.

Total hospital expenses per admission climbed about $2,000 to nearly $30,000 in 2016, according to the latest Health Check report by Grand Valley State University and Tulane University, which analyzes data from Blue Cross Blue Shield of Michigan, Blue Care Network and Priority Health to compare health trends in West Michigan to others nationally.

The $30,000 cost is about $3,000 greater than in Detroit and about $2,000 greater when compared nationally. On the other hand, Medicare expenditures in Grand Rapids are lower than the national average.

This represents a steady increase from about $19,700 in 2005.

The report said the rising expenditures could be explained by at least two factors: increasing reliance on advanced technology and changes in the overall illness severity of hospitalized patients.

Matt Cox, senior vice president and CFO of Spectrum Health, said the Grand Rapids-based health system has had an increased case mix index over the years, which typically means the system is treating sicker patients, which translates to increased costs.

“I think it is easy to correlate this to the fact that more of the less complex services are now outpatient procedures, leaving sicker patients in the hospital,” Cox said. “I would also say that over this period, Spectrum Health has really moved from a tertiary center to a quaternary center. We are offering many more high-end services that were never offered (in West Michigan) before.”

Due in part to changes in the payment incentives for inpatient care, certain types of care have migrated to outpatient settings, the report said.

When it comes to newer and more advanced health care technologies, investment tends to increase rather than reduce costs, the report noted, but it may be worthwhile if outcomes are improved.

The cost of treating coronary artery disease in West Michigan showed a significant 13 percent decrease, dropping from $29,206 in 2016 to $25,329 in 2017, an outlier compared to other disease treatment costs.

“To interpret these findings, one must first accept that health care is extraordinarily complex,” said Dr. Matthew Biersack, chief medical officer of Mercy Health Saint Mary's. “Costs, even for a specific illness like coronary artery disease, are dependent on new and emerging drug treatments, changing practice guidelines, new technologies and shifting landscapes where care is delivered.”

The report said more work is needed to determine the reasons for high hospital costs in Grand Rapids and whether the growth can be addressed without negatively impacting patient health.

Though more people have access to health care, which the report attributes to the Affordable Care Act, about 10.5 percent of people in West Michigan reported cost as the barrier to accessing health care in 2016, a decrease from about 13.5 percent from the previous year.

Sebastian Linde, of Grand Valley State University’s Seidman College of Business, who worked on the report, said more people accessing health care translates to increased long-term savings because people are able to catch ailments early. Without coverage, people may skip annual checkups but then have to pay more when an ailment is discovered later.

The report also showed increased hospital-based personnel but a decrease of average individual payroll, from about $73,000 to about $70,000, perhaps because of increased demand for positions such as nurses and physician assistants.

Linde said, for the most part, growth in West Michigan health care jobs has outpaced that in other regions, as well as other industries in West Michigan.

“We have enough graduates coming out of medical programs to fill the demand,” Linde said. “There might even be a few more than we actually needed at this time.”

But he said he suspects that will change soon as health care offerings expand in West Michigan.

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