All-payer Spending on Common Hospital-based Services in California

Hospital-based care accounts for one third of US health spending or over $1 trillion annually, yet a detailed all-payer assessment of what services contribute to this spending is not available.

Cross-sectional and longitudinal evaluation of hospital financial statements from acute-care general hospitals in California between fiscal years 2007 and 2016. The amounts spent on 41 different revenue centers were included. The primary outcome was state-level and hospital-level spending for each revenue center including decomposing growth trends into changes in volume and prices.

The analysis included 2941 annual financial statements from 331 hospitals. Between 2007 and 2016, total spending across all centers increased 66.6% from $43.7B to $72.9B. Five centers-surgery and recovery, drugs sold to patients, acute medical/surgical floor, the clinical laboratory, and emergency services-accounted for over 50% of total spending in 2016. Overall spending growths ranged from 1.1%/y (acute pediatrics) to 17.9%/y (observation). Other revenue centers with large increases in spending included emergency services (164.7%), clinics (on-site 114.5%, satellite 129.7%), anesthesia (119.6%), echocardiography (114.4%), and computed tomography (100.8%). Most services had volume growths within ±2%/y, although there were exceptions (eg, observation hours increased 10.0%/y). Prices grew fastest for echocardiograms (10.5%/y), cardiac catheterization (9.7%/y), therapeutic radiology (8.0%/y), and emergency visits (7.5%/y). In general, median prices for services in 2016 were larger than Medicare allowed amounts.

Overall hospital-based spending increased 66.6% between 2007 and 2016 in California, but there was wide variation in spending growth across revenue centers. Understanding this variation-including the relative contributions of volumes and prices-can guide efforts to curb excessive health care spending and optimize resource dedication to current and future patient care needs.