NCPA - National Center for Policy Analysis

Blue Cross Blames Hospitals for Health Cost Spiral

October 23, 2002

It appears that every segment of America's health-care industry is blaming every other segment for soaring health-care costs. In a study out today, the Blue Cross Blue Shield Association is fingering hospitals for investing in expensive new medical technologies and launching mergers.

Earlier studies have blamed everything from prescription drug prices to overly demanding consumers.

  • The new study criticizes hospitals for embracing expensive new technologies before making sure they are more effective than older therapies, and charges that some hospital mergers have not resulted in the savings promised.
  • It recommends that hospitals evaluate the effectiveness of new technologies and conduct cost/benefit analyses before installing new devices, or adopting new treatments and therapies.
  • The insurer wants better regional planning to reduce duplicated services -- such as every hospital in the area having the same expensive new scanner or open-heart surgery program.
  • The report calls for more caution in approving mergers or adopting strategies that supposedly reduce competition.

Other organizations agree that market consolidation has affected price, but they say that is hard to quantify.

The Federal Trade Commission several months ago formed a task force to investigate already completed hospital mergers to see if they can find evidence of anti-competitive pricing as a result.

Source: Julie Appleby, "Study: New Technology, Mergers Cause Soaring Health Costs," USA Today, October 23, 2002.

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