UNDERSTANDING HEALTH CARE

Experts get to the heart of growing costs in York County

In just six years, the average charges for various procedures and medical conditions have more than doubled at York County hospitals.

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In just six years, the average charges for various procedures and medical conditions have more than doubled at York County hospitals.

While treatment charges at York, Memorial and Hanover hospitals remain well below regional and state averages, data compiled by The York Dispatch reveal the cost of at least one procedure at each hospital increased by $10,000 or more during the six-year period.

That leaves patients wondering: What's driving the increasing cost of health care and health insurance in society today?

Local hospitals and state officials agree that technological advances and increasing costs of pharmaceutical drugs and medical supplies over the past decade have driven up charges for patients.

Another factor is the average amount hospitals receive in payment per every dollar charged for treatment.

Hospitals in York County have seen nearly a 11-cent decrease in payment per every treatment dollar charged since 2001, according to the annual hospital performance reports conducted by Pennsylvania Health Care Cost Containment Council (PHC4).

And local hospital officials said a key factor in higher costs is the escalating number of "charity treatment cases" -- cases where the hospitals treat uninsured and underinsured patients.

Uninsured: The number of uninsured people in the York community has increased substantially over the past six years, said Dr. Charles Chodroff, senior vice president of patient care for WellSpan Health.

In 2003, WellSpan Health founded the Healthy York Network, which provides uninsured patients a way to receive health care while reducing the costs associated with the care.

As the number of patients in the programs increased, WellSpan Health was awarded a federally funded grant to serve the uninsured or underinsured residents in York County. WellSpan shares funding with Hanover and Memorial hospitals as well as Gettysburg Hospital and Family First Health.

Family First Health operates five facilities across York and Adams counties to provide medical services to low-income residents of both counties.

Since the program was implemented, the number of uninsured individuals enrolled has more than doubled from about 3,000 to nearly 8,000, said Chodroff.

Although the hospital is able to write off the cost of serving those people as charity care, the hospital doesn't receive payment for the treatment, he said.

That means the cost of health care increases for all patients, who ultimately foot the bill for the uninsured services.

"When we talk (to the uninsured) many say, 'I got laid off. I used to have medical benefits, but now I don't,'" said Chodroff.

"That means you're paying for (their services), I'm paying for it ... somebody is paying for it," he said.

Services for the uninsured shift costs to private and public payers, which consumers increasingly are paying in the cost of their premiums, said Karen Ignagni, president and chief executive officer of America's Health Insurance Plans. The national organization represents nearly 1,300 companies that provide health insurance coverage to more than 200 million Americans, according to its website.

Serving the uninsured is much like a retail store having to raise its prices to cover losses from stolen merchandise.

With so many uninsured patients, a hospital must shift higher costs to commercial payers or it wouldn't be able to reinvest in new technology, said Sally Dixon, president and chief executive officer of Memorial Hospital.

"We are, without question, indirectly paying for (the uninsured)," she said. "Directly, not so much, because there's not a surcharge on every patient to treat uninsured when people come for a procedure."

Payments: Meanwhile, Medicare and Medicaid payments to hospitals have decreased, according to the PHC4 reports.

Medicare, the nation's largest health insurance program, covering nearly 40 million Americans, is a health insurance program for people age 65 or older and some people with disabilities under age 65.

While the costs of treating patients has increased since 2003, Medicare paid about 5 percent less for a Memorial patient's cost of care in 2009, data showed.

And even if Medicare's payments would have remained the same, the hospital's revenue still would have been affected, since the percentage of costs covered by Medicare didn't increase with the elevated cost of health care.

Medical Assistance, or Medicaid, is a federal program for low-income, financially needy people, set up by the federal government and administered differently in each state.

Memorial and York hospitals received lower payments for patients' charges from Medical Assistance in 2009 than in 2003, according to the reports.

The council estimates hospitals in the central portion of the state received about 39 cents for every dollar charged for a procedure in 2009; the average for the entire state was 26 cents for each dollar charged.

So if a patient was charged $10,000 for a procedure, hospitals in York County were seeing about $3,900 in payment.

In 2003, however, hospitals in the central portion of the state received in 2009 about 46 cents for every dollar charged for a procedure; the average for the entire state was 30 cents for each dollar charged, according to PHC4 reports.

Technology: Officials from all three area hospitals agree another factor increasing health care costs is advanced technology, such as electronic medical records and robotic assisted surgery devices.

Since the turn of the millenium, York Hospital has invested nearly $80 million in shifting to electronic medical records, said chief financial officer Mike O'Connor of WellSpan Health. That breaks down to about $15 million per year spent toward electronic medical records, he said.

While the switch to electronic records is certainly a factor for increases in hospital charges, it's something that will improve the quality of care and potentially lower costs once the system is fully built and used, O'Connor said.

York Hospital also invested nearly $3 million toward purchasing two da Vinci robotic assisted surgery devices in recent years. They are used to perform cardiac surgeries and hysterectomies in a minimally invasive method, cutting down on recovery time for patients, said Chodroff.

"We put an extra charge down on a patient's bill for use of the da Vinci," he said. "It's a good example of procedure charges going up but revenue to the hospital isn't increasing because most insurance companies and Medicare aren't reimbursing (for the high-tech surgical procedure)."

"With use of a da Vinci, does a patient want to pay more to heal faster with less risk of surgical complications and infection, or pay less for a higher-risk surgery?" he said.

Memorial Hospital also incurred more hospital costs over recent years because of advanced technology, said Dixon.

The hospital started shifting to electronic medical records about five years ago and is nearly 80 percent complete, she said. Dixon said the project should be completed within the next few years, costing the hospital about $5 million.

Since 2003, the hospital has also purchased one da Vinci machine, implemented a pictorial radiology achieving system radiology device so X-ray records can be read anywhere throughout the hospital, and replaced patient beds to prevent bed sores among patients, she said.

Supply costs: Increasing costs of medical and pharmaceutical supplies and an aging population with more medical issues have also pushed up hospital charges, according to local hospital officials.

The cost of medical supplies, including gloves and bandages and pharmaceutical drugs, has significantly increased over the past six years, said O'Connor. About 23 percent of York Hospital's total revenue is used to cover costs of pharmaceutical drugs and non-labor supplies, he said.

Chodroff suggested treatment charges for medical conditions such as pneumonia, respiratory failure and congestive heart failure have increased over the years because of an aging and unhealthy population who are staying in the hospital for extended amounts of time.

And Dixon said patients who are admitted for treatment of medical conditions are often in their 80s and 90s and have pre-existing medical conditions that require them to stay in the hospital much longer, resulting in a more expensive charge.

It is difficult to compare why one procedure at Hanover Hospital would have a greater increase than another over the six years, said spokeswoman Lisa Duffy.

"There have been increases in labor costs, technology, supplies, and pharmaceuticals. Together, these factors, along with others, have a cumulative effect in terms of costs," said Duffy.

Changes in care: There also have been basic changes in the way patients with certain problems are treated.

For example, York Hospital's average charge for treatment of blood clots in extremities increased about 93 percent between 2003 and 2009.

In 2003, all patients with blood clots were likely to have been briefly admitted at York Hospital, said Chodroff.

Today, lower-risk patients are going home, while the admitted patients with blood clots are much sicker than those reflected in the 2003 report and receiving more aggressive treatment, he said.

In another example, the cost of treatment for septicemia -- blood poisoning -- has increased about 88 percent in the past six years at York Hospital.

But in 2003, if a patient came to the emergency room with septicemia, he or she had only a 50 percent chance of living, said O'Connor.

That's because six years ago, physicians might have misdiagnosed a patient with septicemia and he or she might have died on day one or two in the hospital, ultimately keeping hospital charges lower.

But with technological advancements through electronic medical records, a patient who enters the hospital with signs of blood poisoning will be heavily monitored and immediately placed into an intensive care unit for an extended period of time on a high dosage of antibiotics, he said.

"Even though the charge for treatment is going up, more patients are surviving," he said.

-- Reach Lauren Whetzel at 505-5432 or lwhetzel@yorkdispatch.com.