Updated Tool Offers Policymakers Valuable Data Spanning 12 Years and Over 4,600 Hospitals
The National Academy for State Health Policy (NASHP) released an update to its Hospital Cost Tool to include 2022 data and new metrics on hospital labor expenses. As a result, users of this publicly available tool can access data on hospital costs such as operating profit margins, cost to charge ratios, breakeven points, and more for approximately 4,600 hospitals for 2011 through 2022.
As health care expenditures rise with the largest proportion of spending consistently on hospital care, state leaders are seeking assistance to understand and better address these high and rising prices and related costs. The hospital cost tool was developed as part of NASHP’s Center for Health System Costs, which is focused on supporting states to achieve increased affordability to ensure consumers have access to comprehensive, high quality health care.
“State leaders want evidence to drive their policymaking and are striving to understand hospitals — their critical role in the communities they serve as well as their costs for providing patient care,” said Hemi Tewarson, executive director of NASHP. “As the health care market emerges from the unpredictability of the pandemic, it was critical to incorporate data from 2022 into the tool. We hope having 12 years of data available for users to understand cost trends over time, especially a full year post pandemic, will be useful for states to engage hospitals.”
States are actively using the Hospital Cost Tool to inform state policymaking efforts:
Texas
Texas Employers for Affordable Healthcare, a coalition of interested parties, used Texas hospital cost data from the NASHP tool to create a state specific dashboard that shares information by legislative districts. The data played a key role in identifying the impact of consolidation on health care prices and educating state legislators about hospitals’ cost experiences in their own districts.
Charles Miller, senior policy advisor of Texas 2036 stated, “Health price and cost transparency is essential for informing policy that encourages competition, so there can be a level playing field to meet individuals’ health care needs.”
Indiana
In support of state legislative efforts to address rising hospital prices in Indiana, the Employers’ Forum of Indiana highlighted NASHP’s hospital commercial breakeven data as compared with RAND analysis of how much employers pay for patient care. While the difference between these data points is not the hospital’s profit margin (NASHP’s tool shares that data point separately), it helps to provide insight into how hospitals may participate in cost containment efforts while still providing high quality care to consumers. Gloria Sachdev, president of the Employers’ Forum of Indiana, credits the recent enactment of legislation to address hospital costs with having understandable data available to inform thoughtful policy.
Sachdev said, “As strong advocates for transparent health care costs, this updated data is truly welcomed. NASHP’s Hospital Cost Tool has been invaluable to our work on behalf of Indiana’s employers and workers.”
Rhode Island
Rhode Island’s Office of the Health Insurance Commissioner (OHIC) has prioritized affordability and is an active leader in the state’s efforts to contain health care costs. For instance, OHIC leverages its rate review authority to stabilize how quickly health premiums can rise, it leads the state’s work to ensure a more predictable total cost of care growth rate, and more. OHIC shared the NASHP hospital cost data statewide and continues to use it as a resource to engage its hospitals and health systems in discourse focused on statewide health care affordability.
“The Hospital Cost Tool provides unprecedented insights into hospital operating costs and financial performance,” said Acting Health Insurance Commissioner Cory King. “NASHP has performed a great service for resource-constrained state agencies by making this rich dataset available to the public and I look forward to digging into the 2022 data to inform our work in Rhode Island.”
The Hospital Cost Tool uses annual Medicare Cost Reports that have been completed and attested to by hospital staff, then submitted to the federal government and posted to the Healthcare Cost Report Information System (HCRIS) database. In partnership with Rice University’s Baker Institute and Mathematica, whose analysts and economists share their expertise, NASHP uses standard accounting methodology to leverage the dense public reports to provide more digestible cost metrics. The Hospital Cost Tool Calculator provides detailed background information and instructions for those interested in learning more.
Hospital Cost Tool and Resources
For over 35 years, NASHP has been a nonpartisan organization of, by, and for state policymakers, committed to developing and advancing health policy innovations and solutions.
