The anatomy of health care in the United States.

Health care in the United States includes a vast array of complex interrelationships among those who receive, provide, and finance care. In this article, publicly available data were used to identify trends in health care, principally from 1980 to 2011, in the source and use of funds ("economic anatomy"), the people receiving and organizations providing care, and the resulting value created and health outcomes. In 2011, US health care employed 15.7% of the workforce, with expenditures of $2.7 trillion, doubling since 1980 as a percentage of US gross domestic product (GDP) to 17.9%. Yearly growth has decreased since 1970, especially since 2002, but, at 3% per year, exceeds any other industry and GDP overall. Government funding increased from 31.1% in 1980 to 42.3% in 2011. Despite the increases in resources devoted to health care, multiple health metrics, including life expectancy at birth and survival with many diseases, shows the United States trailing peer nations. The findings from this analysis contradict several common assumptions. Since 2000, (1) price (especially of hospital charges [+4.2%/y], professional services [3.6%/y], drugs and devices [+4.0%/y], and administrative costs [+5.6%/y]), not demand for services or aging of the population, produced 91% of cost increases; (2) personal out-of-pocket spending on insurance premiums and co-payments have declined from 23% to 11%; and (3) chronic illnesses account for 84% of costs overall among the entire population, not only of the elderly. Three factors have produced the most change: (1) consolidation, with fewer general hospitals and more single-specialty hospitals and physician groups, producing financial concentration in health systems, insurers, pharmacies, and benefit managers; (2) information technology, in which investment has occurred but value is elusive; and (3) the patient as consumer, whereby influence is sought outside traditional channels, using social media, informal networks, new public sources of information, and self-management software. These forces create tension among patient aims for choice, personal care, and attention; physician aims for professionalism and autonomy; and public and private payer aims for aggregate economic value across large populations. Measurements of cost and outcome (applied to groups) are supplanting individuals' preferences. Clinicians increasingly are expected to substitute social and economic goals for the needs of a single patient. These contradictory forces are difficult to reconcile, creating risk of growing instability and political tensions. A national conversation, guided by the best data and information, aimed at explicit understanding of choices, tradeoffs, and expectations, using broader definitions of health and value, is needed.

Relationship between occurrence of surgical complications and hospital finances.

IMPORTANCE: The effect of surgical complications on hospital finances is unclear. OBJECTIVE: To determine the relationship between major surgical complications and per-encounter hospital costs and revenues by payer type. DESIGN, SETTING, AND PARTICIPANTS: Retrospective analysis of administrative data for all inpatient surgical discharges during 2010 from a nonprofit 12-hospital system in the southern United States. Discharges were categorized by principal procedure and occurrence of 1 or more postsurgical complications, using International Classification of Diseases, Ninth Revision, diagnosis and procedure codes. Nine common surgical procedures and 10 major complications across 4 payer types were analyzed. Hospital costs and revenue at discharge were obtained from hospital accounting systems and classified by payer type. MAIN OUTCOMES AND MEASURES: Hospital costs, revenues, and contribution margin (defined as revenue minus variable expenses) were compared for patients with and without surgical complications according to payer type. RESULTS: Of 34,256 surgical discharges, 1820 patients (5.3%; 95% CI, 4.4%-6.4%) experienced 1 or more postsurgical complications. Compared with absence of complications, complications were associated with a $39,017 (95% CI, $20,069-$50,394; P < .001) higher contribution margin per patient with private insurance ($55,953 vs $16,936) and a $1749 (95% CI, $976-$3287; P < .001) higher contribution margin per patient with Medicare ($3629 vs $1880). For this hospital system in which private insurers covered 40% of patients (13,544), Medicare covered 45% (15,406), Medicaid covered 4% (1336), and self-payment covered 6% (2202), occurrence of complications was associated with an $8084 (95% CI, $4903-$9740; P < .001) higher contribution margin per patient ($15,726 vs $7642) and with a $7435 lower per-patient total margin (95% CI, $5103-$10,507; P < .001) ($1013 vs -$6422). CONCLUSIONS AND RELEVANCE: In this hospital system, the occurrence of postsurgical complications was associated with a higher per-encounter hospital contribution margin for patients covered by Medicare and private insurance but a lower one for patients covered by Medicaid and who self-paid. Depending on payer mix, many hospitals have the potential for adverse near-term financial consequences for decreasing postsurgical complications.