- Hospitals in southeastern Wisconsin are controlling costs far better than the national average, according to a Milliman, Inc. report released July 23. The study was done for the Greater Milwaukee Business Foundation on Health, Inc.
- These hospitals' payments from commercial health insurers and employers increased an estimated 37%—roughly half the 75% national increase in the national hospital component of the Consumer Price Index —from 2003 through 2012, the actuarial firm said.
- Various factors contributed to the relatively slight increase in the region's cost of hospital care. These include: more competition from healthcare systems' expansion into each others' geographic markets; pressure from insurers and employers; and preparation for changes in the way in which payers, including Medicare, reimburse for care.
The study found that hospital operating costs on average climbed 19% in the region, compared with a 34% increase nationally. It estimated that 35% of the cost of hospital services for commercial health plans results from payment rates from government programs, particularly Medicaid, falling below hospitals' costs, and from bad debt and charity care. Milliman's study is based on a formula that adjusts for volume, mix of services and severity of patients to allow comparisons among hospitals. It updates similar studies done in 2009, 2011 and 2012.
Interestingly, a study released in June by the foundation found that physician fees in southeastern Wisconsin are nearly 50% higher on average than in other Midwest markets for commercial health plans. The private foundation was created in 2002 to improve health care in the region—in response to much higher health insurance premiums in southeastern Wisconsin than in other Midwestern cities. Its studies estimated the region's premiums were as much as 55% higher in 2000, and 39% higher in 2003, than elsewhere in the Midwest. The premium gap narrowed to about 7% in 2011; at that time, a separate study found that hospital costs in southeastern Wisconsin increased at roughly half the national average rate from 2003 through 2011. So the latest Milliman study reinforces that trend.
The bottom line? "All the health systems are being very effective in controlling costs," Keith Kieffer, a management consultant with Milliman, told the Milwaukee Journal Sentinel.