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Comparison of hospital costs in California, New York, and Canada
J Zwanziger1, G M Anderson, S G Haber
1Department of Community and Preventive Medicine, University of Rochester, NY.
Insights
US hospital spending per person was one-third higher than in Canada in 1987. Higher unit costs, not output differences, primarily drove these greater healthcare expenditures.
Area of Science:
- Health economics
- Comparative health policy
- Healthcare administration
Background:
- Hospital spending represents the largest component of overall healthcare expenditures.
- Significant and recurring differences in hospital spending exist between the United States and Canada.
Purpose of the Study:
- To compare hospital spending between two U.S. states and two Canadian provinces.
- To understand the primary drivers of differences in per capita hospital costs between the two countries.
Main Methods:
- Developed a composite measure of hospital output by combining various output metrics.
- Converted all measures into U.S. dollars for direct comparison.
- Analyzed hospital spending data from selected U.S. states and Canadian provinces for 1987.
Main Results:
- In 1987, per capita hospital costs were approximately 33% higher in the United States compared to Canada.
- The analysis indicated that higher unit costs were the main reason for the disparity in U.S. spending.
- Differences in hospital output levels did not significantly contribute to the higher costs in the U.S.
Conclusions:
- Higher unit costs, rather than greater hospital service volume, explain the elevated hospital spending per capita in the U.S. versus Canada.
- Findings highlight the importance of investigating cost structures within healthcare systems for policy implications.
Abstract:
When the components of health care spending are broken down, hospital spending accounts for the largest portion of the total. This DataWatch compares hospital spending in two U.S. states with spending in two Canadian provinces, to gain better understanding of the recurring differences in hospital spending reported by the two countries. To make the data comparable, the study combines different hospital output measures into a composite measure that is converted into U.S. dollars and applied to data from both countries. In 1987 hospital costs per person were about one-third higher in the United States than in Canada. Results suggest that the higher U.S. costs are due primarily to higher unit costs rather than to differences in output.