Study: Administrative costs for U.S. healthcare are highest

A team of international health policy experts recently compared administrative costs of U.S. hospitals with those of other industrialized nations with various types of healthcare systems: Canada, England, Scotland, Wales, France, Germany, the Netherlands, and the United States. The study, which appears in the September issue of HealthAffairs, found that administrative costs accounted for more than 25% of total U.S. hospital expenditures, and the percentage is increasing. Next highest were the Netherlands (just under 20%) and England (15.5%), which are transitioning to market-oriented payment systems according to the study abstract.

“Scotland and Canada, whose single-payer systems pay hospitals global operating budgets, with separate grants for capital, had the lowest administrative costs. Costs were intermediate in France and Germany (which bill per patient but pay separately for capital projects) and in Wales. Reducing U.S. per capita spending for hospital administration to Scottish or Canadian levels would have saved more than $150 billion in 2011. This study suggests that the reduction of U.S. administrative costs would best be accomplished through the use of a simpler and less market-oriented payment scheme,” the authors concluded.

Source: HealthAffairs