Comparison of hospital costs in California , Thorpe and J P Newhouse

When the components of health care spending are broken down, hospital spending accounts for the largest portion of the total. This DataWatch compares hospital spending in two U.S. states with spending in two Canadian provinces, to gain better understanding of the recurring differences in hospital spending reported by the two countries. To make the data comparable, the study combines different hospital output measures into a composite measure that is converted into U.S. dollars and applied to data from both countries. In 1987 hospital costs per person were about onc-third higher in the United States than in Canada. Results suggest that the higher U.S. costs are due primarily to higher unit costs rather than to differences in output. The cost of hospital services is by far the largest single component of health care spending in both the United States and Canada. Despite this similarity, the difference in per capita hospital spending is an important factor in explaining the difference in total per capita health care spending between the two countries. Amidst the interest in a Canadian-style alternative to the current U.S. health care system, there has been little detailed comparison of hospital costs and hospital care in the two countries. In this DataWatch we compare hospital spending per person in Canada and in the United States. Both countries experienced similar nationwide increases in hospital expenditures between 1981 and 1987 (approximately 7.5 percent annually) (Exhibit 1). In 1987 hospital costs per capita were about one-third higher in the United States than in Canada; the difference in these costs accounted for about one-third of the total difference in per capita personal health care spending between the two countries. Two major factors might account for these differences. More hospital care, measured as days of care or discharges, might be provided in the United States than in Canada, or costs per day or per discharge might be Jack Zwanziger is with the Department of Community and Preventive Medicine, University of Rochester, in New York. Geoffrey Anderson is with the institute for Clinical Evaluative Sciences in Toronto, Ontario. Susan Haber is with the Department of Health Policy and Management, Harvard School of Public Health. Ken Thorpe is deputy assistant secretary for health in the U.S. Department of Health and Human Services. Joe Newhouse is with the Harvard School of Public Health, Harvard Medical School, and the Kennedy School of Government at Harvard. on O cber 0, 2017 by H W T am H ealth A fairs by http://conealthaffairs.org/ D ow nladed fom