NEWS RELEASE

The Rising Tide:

Hospital Costs Climb Close to 100 Percent in Three-Year Period

Edison, NJ, May 8, 2003… A hospital stay in 2002 cost nearly twice as much as the same stay in 2000, according to a review of medical/surgical room and board rates for 75 New Jersey hospitals.

The Health Care Payers Coalition of New Jersey (HCPC), a not-for-profit consumer advocacy group and Preferred Provider Organization (PPO), conducted the comprehensive review to compare and contrast listed room and board rates in the state in 2000, 2001 and 2002.  The review determined an overall 93.7 percent increase.  HCPC Executive Director Edward Geisler calls these results “alarming.”

Geisler said, “Of the 75 hospitals included in our review, 24 – nearly one-third – implemented a more than 100 percent increase in medical/surgical room and board rates during this three-year period. Nine hospitals increased their rates by at least 200 percent in the same timeframe. This is a staggering burden for health care consumers in New Jersey.”

In 2002, ten hospitals in New Jersey had daily medical/surgical room and board rates in excess of $5,000.  Of this group, five charged more than $6,000 per day, and two billed patients more than $8,800 for each day they were hospitalized.  These fees do not include physician visits, tests, prescription medicine or over-the-counter drugs.

“In 2002, Warren Hospital in Phillipsburg charged patients $9,500 per day per room, a 435 percent increase from its 2000 rate, making it the most expensive hospital daily room and board rate in the state,” Geisler said.  “St. Joseph’s Hospital in Paterson raised its per day medical/surgical room and board rate by 311 percent in that same time period, bringing its daily rate to slightly more than $5,000.”

At $1,043 per day, Hunterdon Medical Center, Flemington, is cited by the HCPC hospital review as having the lowest room and board rate in 2002.  This amount represented a 21 percent increase between 2000 and 2002.

Geisler sees New Jersey hospital rates as out of balance with each other.   “There is no rhyme or reason for the tremendous cost disparity among the hospitals in our state,” he said.  “One hospital bed is not so different from another.

 “It becomes very difficult for insurers, PPOs and HMOs to keep health care costs at a reasonable rate when hospital room rates – among other costs – are so unpredictable as they are here in New Jersey.”

 According to Geisler, the profitability of New Jersey’s hospitals has improved dramatically over the last two years.  The New Jersey Hospital Association reported combined earnings for all hospitals in the state as $320 million for 2000 and 2001.  Compared with the $429 million loss suffered collectively by New Jersey hospitals during 1998 and 1999, “this is a stunning change,” Geisler noted. “It has fallen squarely on the backs of New Jersey’s health care consumers.”

A recent report by the Center for Studying Health System Change indicates a trend for hospitals to promote arrangements in which fees are based on a percentage of charges incurred during a hospital stay rather than per diem fees.  HCPC’s Geisler sees this as further raising the cost of health care in New Jersey.

There are other reasons, as well.  “Many hospitals raise their rates to increase federal Medicare reimbursements,” the HCPC Executive Director said.  “Medicare payments to hospitals are based on Diagnostic Related Group (DRG) rates that are assigned to every medical or surgical procedure.  By hospitals simply raising their charges, they can become eligible for additional payments from Medicare due to its ‘outlier’ provisions.  We must carefully monitor these cost increases in order to protect the consumer.”

The Health Care Payers Coalition of New Jersey is a health care purchasing cooperative for self-insured health plans that cover more than 100,000 New Jerseyans.  Founded in 1992, HCPC promotes health care quality and emphasizes the empowerment of health care consumers by providing them with important information and education.   For additional information, visit www.hcpc.org.

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