A study conducted in 2012 by the Institute for Health Metrics and Evaluation (IHME) revealed that hospitalization of the United States’ civilian population, that is not standardized, accounts for 29 percent of all hospital health care costs. This percentage was attained even though only seven percent of the U.S. population stayed in a hospital that year. Moreover, when compared to statistics from 130 other countries and inpatient data from 128 different countries, the United States spends more than any of these countries on hospital care. The medical expenses occur because the average inpatient stay in an American hospital costs more than $22,000 and the average outpatient visit costs almost $500.
The Institute conducted this study to produce the first global estimates for outpatient visits and inpatient admissions throughout the world. By using outpatient data from 130 countries and inpatient data from 128 countries, researchers determined that the United States exceeds every other nation included in the study in total healthcare expenses.
One reason for the higher costs in America is the itemization of expenditures and the lack of standardization of medical equipment. Another recent study conducted by Elisabeth Rosenthal, a metro reporter covering health and hospitals for The New York Times revealed that European hospitals have standardized equipment, and the billing is not broken up into various charges, such as operating room costs, recovery room fees, and facility fees. In her article about the high costs for Americans, Rosenthal suggests that the United States needs a system of standardized equipment and charges for all hospitals “…instead of [bills that have] 20, 40 components, with each [hospital] having its own financial model, and each one making a profit.” Deloitte’s Center for Health Solutions’ executive director, Paul Keckley, also notes, “Specialists easily make more money here than in other countries.”
The more complicated system of the U.S. with its inherent profit motive is at the core of higher costs in American hospitals. Associate professor of business administration at the University of Rochester, Gerry Wedig explains why costs are lower outside the United States: “Overseas, governments compress patient demand by acting as a tough regulator and negotiator for the whole system.”