Factors Associated with the Increasing Cost of Hospital Care

Abstract

In the last two decades, and particularly in the last five years, the cost of hospital care has risen more rapidly than the cost of almost any other major good or service pro vided in our society. The result has been great concern among the public, government, and providers of service. The rising total cost of hospital care is due both to the increasing use of hospital services and to the increasing cost per unit of these services. In the last ten years, use of services has accounted for less than one-eighth of the total increase in hospital costs, cost per unit increases being responsible for the rest. The latter increases can be shown to result from general inflationary trends in the economy plus certain forces acting in a special way on hospitals. These forces include an increase in wages, a rise in the value of hospital plant and equipment over and above general inflation, and a larger number of personnel in relation to the days of patient care provided, or patient days. A review of reasons for the increases in cost per unit of service suggests that there is no single factor primarily responsible. Consequently, a solution to the cost containment problem will be difficult to achieve.