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Hospital Stays Shrink as Costs Soar

Sept. 25, 2002 -- Patients are spending less time in the hospital, but costs continue to skyrocket -- rising by roughly a third in the last decade.

The Agency for Healthcare Research and Quality found that while sick people are spending less time in the hospital, the costs associated with those stays increased anywhere from 20-50% from 1993-2000. This includes expenses for nursing care, laboratory and diagnostic tests, drugs, operating facilities, and patient rooms. Physician fees, however, were not included.

The average hospital stay for a heart attack, for example, fell from 7.4 days to 5.5 -- down 26% -- while the cost rose 33%, from $19,000 to more than $28,000.

Technological advancements and higher drug costs contribute to the rising expense, while economic pressures have led to the shorter stays.

In analyzing hospital stays for the top 50 medical diagnoses in 2000, the researchers found that:



I thought you might find this article interesting.  The cost structure of the health care business (heavily fixed) would suggest that the cost of any treatment would not decline as the number of days spent in the hospital declines because fixed costs remain the same.  But why would costs increase.  Technological improvements might increase FC, but VC might also increase.  Why, can you think of examples?