Share of Hospital Cost Growth Explained by Various Factors 2001-2006

Higher costs of caring are a bigger factor in spending growth than increased demand for care.

Source: AHA analysis of American Hospital Association Annual Survey data, 2001-2006, for community hospitals; Centers for Medicare and Medicaid Services, Office of the Actuary;

Intensity and Other 8%

Change in

Number of ServicesProvided

30%Costs of Goods and Services Purchased

62%

Share of Cost Growth Explained by Key Components of Hospital Costs

2001-2006

All Other – 12%

Prescription Drugs – 4%

Prof. Liability Insurance – 2%Professional Fees – 3%

Wages & Salaries/Employee Benefits – 41%

Growth in labor costs is the most important single factor driving up the cost of hospital care.

Costs of Goods and Services

Purchased62%

Source: AHA analysis of American Hospital Association Annual Survey data, 2001-2006, for community hospitals; Centers for Medicare and Medicaid Services, Office of the Actuary;

Factors Influencing the Number of Services Provided2001-2006

Both a growing population and more hospital use per person have led to higher service volume.

Number of Services Provided

30%

PopulationGrowth

13%

Use Rates17%

Source: AHA analysis of American Hospital Association Annual Survey data, 2001-2006, for community hospitals; Centers for Medicare and Medicaid Services, Office of the Actuary;