This doesn’t speak to my point, Maggie. No matter why the construction is being done, it still isn’t the main force behind rising hospital costs.

“As for passing on the costs … Medicare began phasing out DRG payments and is moving to a MS DRG system … these reimbursements will be based … ‘on hospital costs’”

You haven’t done your homework. The MS-DRG isn’t based on the costs of an individual hospital. “Cost” to CMS is only a single component of a formula used to determine a one-size-fits-all payment. This payment, under the MS-DRG system, will average well below cost.

“Hospitals can capture those add-on payments by contructing a new wing and installing the new technology.”

Again, you’re not getting how the system works. When I showed this part of your comment to one of my colleagues, she laughed aloud.

“Supply will drive demand–raising Medicare spending.”

This odd mutation of supply-side economics is obviously a popular talking point among “progressive” policy wonks, but it has no basis in reality.

Here, BTW, is an AHA chart showing how Medicare and Medicaid payments relate to hospital costs in the aggregate. As you can see, payments have been well south of cost for some time.

IF you are really interested, you should read MedPac’s 500 -page plus March report.

But I suspect that, rather than doing reserach, you prefer to ramble on . . .

Hospitals did less spending on construction in th 1990s for various reasons: the biggest was that they didn’t need to. Inpatient stays became much shorter, and many more patients were treated on an outpatient basis.

So hospitals don’t need more beds.
In fact, in many areas of the country, we already had too many beds and too much duplication of very expensive equipment in hospitals located in the same area. (See numerous articles in “Health Affairs” on the “medical arms race.”)

Eight-five percent of the construction spending, according to MedPac, was not for remodeling worn out buildings–it was for “New facilities and expansion of existing hospitals. ”

MedPac questions whether this building boom is actually adding to the efficiency of hospitals–i.e. is it leading to higher quality care at a lower cost?

There is little evidence that it is. Meanwhile, the number of “adverse events” climbs.

As for passing on the costs of the building boom, perhaps you haven’t heard, but as of 2008, Medicare began phasing out DRG payments and is moving to a MS DRG system (medical severity) made up fo 745 groups (in contrast to the 538 DRG groups.)

Most importantly, these reimbursements will be based, not “on hospital charges, but on hospital costs.”

In addition, to diganostic group payments “add–on payments are made for cases using specified technologies.”

Hospitals can capture those add-on payments by contructing a new wing and installing the new technology–even if the hospital 1/4 mile away already has the same technology.

We also know that when hospitals expand capacity, they always manage to fill the beds–even if patients don’t need to be hospitalized. In areas of the country where there are more hospital beds, Medicare spends twice as much per Medicare beneficiary (after adjusting for race, overall health in that geogaphic area, etc.), largely due to unnecessary hospitalizatoins–and the outcomes are no better, and often they are worse. Hospitals are dangerous places, especially if you don’t need to be there. (MedPac also talks about this in its March report, should you care to read it.)

AS I reported, the Center for Health System Change reports that much of the building is in the suburbs, and to expand on delivering the most lucrative services–with little or no attention paid to whether the community needs extra beds–or those services.But again, supply will drive demand–raising Medicare spending.

As to passing on the costs of construction,one way to do that is to jack up the volume of sersvices provided to a given patient.
MedPac reports that much of the increase in Medicare spending on hospitals is related to “increases in the number of servcices patients received each day.”

More diagnostic tests, for example, is a good way to pay for the new wing and all of the new diagnostic imaging equipment that a hospital has bought. Putting a new born in an neo-natal intensive care unit is a good way to help pay for the unit–even if he doesn’t need to be there. (See Health Affairs on over-use of neo-natal ICUs and how that hurts newborns.)

Next time you decide to attack someone,
check your facts.