A Medical Device Daily

Congress and private payers have pushed the use of outpatient facilities in an attempt to blunt the growth of high-cost hospitalizations, but recent data collected by the Agency for Healthcare Research and Quality suggests that hospital charges continue their upward trend apace despite the push toward outpatient treatment.

A new set of numbers from the Healthcare Cost and Utilization Project (HCUP) analysis indicate that the nation's hospitals "billed nearly $875 billion in total charges in 2005 for in-patient hospitalizations," an increase of 89% over 1997, when hospitals billed private and public payers for about $462 billion.

The charges in 2005 were associated with slightly more than 39 million stays, which is a jump of only about 13% over the baseline year of 1997, when hospitals discharged about 34.7 million patients. Hence it seems that while hospitalizations are up, the per-discharge cost is up quite a bit more. The figures do not include hospital outpatient care, emergency care for patients not admitted or physician fees involved with those admissions.

True to form, a small number of diseases and conditions consumed a disproportionate share of charges with the five most expensive conditions consuming roughly 20% of all hospitalization costs. Of the top five, three were related to cardiovascular disease, a fact that comes as no surprise to anyone in the device industry. First place went to coronary artery disease, which rang up almost $46 billion in hospital charges in 2005 and accounted for 5.3% of all hospitalization costs. Second place went to pregnancy and delivery of newborns at nearly $44 billion (5%).

Given the nearly identical costs for these two sources of admissions, one might expect the numbers of admissions from each was fairly similar. Not so. The number of stays for coronary artery disease totaled more than 1,100 whereas the number of pregnancy/delivery admissions came to more than 4,700, rendering procedures for the former more than four times more costly per admission than the latter.

Care and treatment of newborns generated more than $35 billion in costs for 4% (slightly more than 4,400 admissions). The last two of the top five spots are held by acute myocardial infarction (AMI) and congestive heart failure (CHF), which both accounted for about $30 billion in 2005. The total cases of CHF outnumbered those of AMI 1,090 to 662, indicating that infarction was substantially more expensive to treat, giving device makers a heads up on what payers and hospitals might find most interesting in terms of cost containment.

The all-important question here - that of who paid the tab - was also detailed in the HCUP report. According to the report, Medicare paid nearly half the tab at 47% and Medicaid coughed up another 14.2% for a total paid by CMS of 61.2%, which comes to about $535 billion. Private insurance accounted for less than a third (31.1%), or about $272 billion. The balance was divided by the uninsured at 4.4% and a catch-all category for missing data and other sources of reimbursement at 3.2%.

As is typically the case with HCUP data, these were drawn from community hospitals, defined in the report as "short-term, non-federal, general and other hospitals," a category that excludes long-term care hospitals and other specialty units.

HHS, SFDA sign safety memo

The recent furor surrounding unsafe products made in mainland China and exported to the U.S. may not have had anything to do with it, but the Department of Health and Human Services recently inked a memorandum of understanding (MOU) with China's State Food and Drug Administration in an effort to guarantee the safety and efficacy of drugs and devices made in that latter nation.

According to the Dec. 11 report at the HHS web site, SFDA commissioner Shao Mingli and HHS chief Michael Leavitt inked the MOU as part of a larger effort to enhance commercial ties between the world's largest economy and the world's most populous nation. The United States-China Strategic Economic Dialogue, as it has been dubbed, is designed to "create a Cabinet-level forum to articulate long-term objectives while managing short-term challenges in our economic relationship," according to the web site of the U.S. Department of the Treasury. Treasury Secretary Henry Paulson was among the delegates from the U.S. who attended the Dec. 12-13 meeting in Beijing as part of the ongoing strategic dialogue.

The agreement specifically calls upon drug and device makers in China to register with SFDA and for SFDA and FDA to jointly develop a certification process for products exported to the U.S. To that end, the agencies will conduct training programs to cover procedures such as site inspections, clinical trial design and conduct, and regulatory development. SFDA has also agreed to notify FDA "within 24 hours of any determination that a product sent to the United States could cause serious adverse health consequences, and also provide the tracking information necessary to identify the shipment and supplier," according to the HHS statement.

SFDA also promised to "facilitate" FDA access to drug and device plants in China.