Dive Brief:
- California hospitals have the "tremendous" potential to save $10 billion per year by reducing excessive patient stays, suggests a new analysis by Axene Health Partners.
- The analysis, which looked at 275 hospitals across the state, concluded inpatient costs could be cut back 25% to achieve the $10 billion in savings.
- The savings would apply to patients covered by Medicare, Medicaid, and most substantially the commercial insurance market, the report stated.
Dive Insight:
The report has opened debate about the true potential for savings in California hospitals, with the report finding possible evidence of waste, while some experts argue the projected savings are overstated.
Although the state spends an estimated $300 billion per year on healthcare, industry leaders say California is already on the forefront of cost reductions and payment reform, and the California Hospital Association notes the state is one of the lowest in the U.S. on length of stay and admissions.
Even so, "We are spending more than we should," says author and actuary David Axene, who plans to prepare similar reports on additional states.
Among the report's findings were California hospitals coded patient visits for billing purposes with about 28% more complications or severe conditions than what's found nationally, the Los Angeles Times reported. While Axene did not speculate on why, the Times notes exaggerating patients' conditions would boost their revenue.