Addressing the Rising Cost of Healthcare

They say before you can fix a problem, you first need to admit you have a problem.  Well, one of the problems we are facing here in the United States is the sticker shock associated with medical care.  Every time you go to the doctor and every time you have a surgical procedure, you are faced with exorbitant copays and deductibles that have continued to creep higher over the last few years.  For some families, their entire financial wellbeing has been wrecked or severely compromised by exorbitant medical bills.  Something needs to be done.

Leaders at the American Hospital Association (AHA) are well aware of the rising cost of healthcare in this country, and they have recently presented proposals to address and correct the issue.

Cost Drivers

According to the AHA, hospital expenses are growing faster than payments, rising 7.5% in 2025, with workforce payments reflecting 60% of costs.  So, what’s the reason for the increasing costs of American healthcare?  The AHA has identified multiple factors, including the following:

• More Patients with Greater Complexity. With the Baby Boomer generation now in their golden years, more people are seeking medical services, and many of these individuals are increasingly sicker, with multiple ailments.
• Soaring Drug Costs. Many drugs now cost tens or even hundreds of thousands of dollars per patient.
• Administrative and Other Costs. Hospitals spend billions of dollars to verify coverage, obtain authorizations and process claims.  In addition, the costs of equipment, IT and cybersecurity are also rising rapidly.
• Higher Insurance Costs. High-deductible health plans and growing co-insurance requirements are pushing more of the financial burden directly to patients.
• Inadequate Payment for Essential Services. Medicare and Medicaid pay below cost, and more than half of hospital costs are linked to services where reimbursement falls short.  That is not sustainable.

So, there’s plenty of causes to point to when it comes to the high cost of medical care, but what about solutions—are there any?

Recommendations for Resolution

The AHA has identified five major areas that need to be targeted in order to help ease the healthcare cost crisis.  These are provided below:

Improve Individual and Community Health

This can be achieved by working to increase access to primary care and prevention, improving transparency of pricing information, revising the tax code to help those with catastrophic health costs, modifying high-deductible requirements and creating incentives that lead to better health.

Transform Care Delivery

Better, more efficient and less costly care can be achieved by way of strategies such as increasing provider participation in accountable care organizations (ACOs), reforming the medical liability system, removing legal barriers to collaboration, minimizing low-value treatments and better management of advanced illnesses.

Reduce Administrative Waste

The AHA recommends the reduction or elimination of redundant documentation and other regulatory burdens that are outdated and no longer effective.  Other recommendations include standardizing claim information and adjudication, shifting collection responsibilities to insurers, eliminating fraud and abuse, and streamlining the licensing and credentialing process.

Lower Drug/Device Costs

By increasing access to and incentivizing use of cost-effective generic drugs, curtailing patient demand for certain high-cost therapies and adopting value-based reimbursement policies, the AHA believes lower drug prices could be achieved for the consumer.

Innovate Improvement Outcomes

Necessity is the mother of invention and there is a need for innovation in the healthcare space that directly targets costs.  This might involve expanding access to predictive analytics and early detection tools (such as artificial intelligence), using data driven tools to prevent avoidable harm and utilization, improving access to health information technology, advancing technology-enabled care models and aligning payment with proven digital innovations.

By following the AHA recommendations, it is hoped that the ultimate result is better quality of care, along with lower costs absorbed by facilities, providers and consumers.