
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: THURSDAY, April 11, 1991                   TAG: 9104110211
SECTION: NATIONAL/INTERNATIONAL                    PAGE: A-6   EDITION: METRO 
SOURCE: Associated Press
DATELINE: BOSTON                                LENGTH: Medium

HOSPITAL COSTS ARE LIKELY TO GROW RAPIDLY

Hospital costs are likely to grow rapidly during the 1990s, because the relatively painless savings from cutting back on needless hospital stays have nearly all been won, a study concludes.

The steady increase in hospital costs slowed temporarily during the mid-1980s, and the new research found that this can be explained entirely by an abrupt reduction in unnecessary days in the hospital. The total number of patient hospital days fell by 28 percent between 1981 and 1988.

However, the researchers contend that this was a one-time saving. Even though insurance companies and health maintenance organizations still vigilantly guard against unneeded hospital stays, hospital costs will again climb sharply unless something else is done to control costs.

Dr. William Schwartz, principal author of the study, said big employers and others worried about out-of-control medical costs have been slow to recognize that they have already wrung all the important savings they can from hospital admissions.

"Managed care organizations and industry have been burying their heads in the sand, because things looked so good for a couple of years," said Schwartz, a physician and medical economist at Tufts University School of Medicine.

The researchers said that hospital costs are likely to go up substantially because of new hospital technology, higher salaries and more patients with AIDS, among other factors.

Their work, based on data from the American Hospital Association and the Health Care Financing Administration, was published in today's New England Journal of Medicine.

Dr. Joseph Newhouse of Harvard University said the research "suggests that hospital costs will continue to trend up unless the payment system sends a signal to the medical care system that all new technology won't necessarily be paid for."

The movement toward reducing the time people stay in the hospital began in earnest in the early 1980s, when the Medicare system phased in a new way of paying hospitals for care of the elderly. Instead of paying whatever bills patients ran up, Medicare began reimbursing with flat fees regardless of how long they stayed in the hospital.

by CNB