Hospital Charges

How Much Do Hospitals Charge?

Hospital charges are the amount the hospital bills for the entire inpatient stay and do not include most professional (physician) fees. Costs tend to reflect the actual costs of producing a service, while charges represent what the hospital billed for the case (but not what was actually reimbursed).

• After adjusting for inflation,⁶ the average hospital charge increased by 24 percent from $13,900 in 1997 to $17,300 in 2002.
• Over this same time period, the average cost^vi for a hospital stay remained essentially the same—$7,500.

Conditions With the Highest Charges

• The most expensive conditions have average charges more than five times higher than the overall average hospital charge.
• The most expensive condition is infant respiratory distress syndrome; the average charge for this condition is more than $90,000.
• Many of these expensive conditions involve invasive or high-technology procedures. For example, infant respiratory distress syndrome can involve lengthy stays in intensive care. In fact, 4 of the top 10 most expensive conditions in the hospital are related to care of infants with complications: respiratory distress, prematurity, heart defects, and intrauterine hypoxia/birth asphyxia.
• Three of the top 10 most expensive conditions relate to the circulatory system: heart valve disorders, heart defects, and aneurysms.
• The conditions with the highest charges continue to be relatively uncommon. The 10 most expensive conditions combined represent less than 1.5 percent of all discharges.
• Even though long lengths of stay can result in high expense, 4 of the 10 most expensive reasons for hospital stays are NOT among those with the longest stays: cardiac congenital anomalies; heart valve disorders; aneurysms; and adult respiratory failure, insufficiency, and/or arrest.

Table 9. Principal Diagnoses With the Highest Mean Charges

Principal Diagnoses With the Highest Mean Charges	Mean Charges*	Mean Length of Stay (in days)
1. Infant respiratory distress syndrome	$91,400	24.2
2. Premature birth and low birthweight	$79,300	24.2
3.Spinal cord injury	$76,800	12.8
4. Leukemia (cancer of blood)	$74,500	14.1
5. Intrauterine hypoxia and birth asphyxia (lack of oxygen to baby in uterus or during birth)	$72,800	15.6
6. Cardiac and circulatory birth defects	$71,400	8.9
7. Heart valve disorders	$70,900	8.8
8. Polio and other brain or spinal infections	$63,200	13.0
9. Aneurysm (ballooning or rupture of an artery)	$55,300	7.7
10. Adult respiratory failure or arrest	$48,500	10.0

* Charges shown reflect figures for acute hospital care only and do not include professional fees, rehabilitation, followup care, or home care costs.

Conditions With the Longest Lengths of Stay

• The average length of stay is 5 days— 6 percent shorter than in 1997.
• The two conditions with the longest hospital stays continue to be related to infants: respiratory distress and prematurity. Each condition has a mean length of stay of 24 days.
• Conditions with lengthy hospital stays continue to be relatively uncommon. Collectively, the 10 conditions with the longest stays represent only 2 percent of all discharges.
• Even though long lengths of stay can be costly, 4 of the 10 conditions with the longest lengths of stay are NOT among the most expensive conditions: tuberculosis, schizophrenia and related disorders, preadult mental disorders, and rehabilitation care— all non-surgical, non-intensive care conditions.

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^vi This cost represents the resource costs to produce services plus an additional allowance for bad debt (approximately 5 percent) and ordinary net income (approximately 3 percent), based on the long-run average for the industry.

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Table 10. Principal Diagnoses With the Longest Mean Length of Stay

Principal Diagnoses With the Longest Mean Length of Stay	Mean Length of Stay (in days)	Mean Charges*
1. Infant respiratory distress syndrome	24.2	$91,400
2. Premature birth and low birthweight	24.2	$79,300
3. Tuberculosis (TB)	16.8	$46,700
4. Intrauterine hypoxia and birth asphyxia (lack of oxygen to baby in uterus or during birth)	15.6	$72,800
5. Leukemia (cancer of blood)	14.1	$74,500
6. Polio and other brain or spinal infections	13.0	$63,200
7. Schizophrenia	13.0	$18,300
8. Spinal cord injury	12.8	$76,800
9. Preadult mental disorders	12.5	$23,000
10. Rehabilitation care, fitting of prostheses, and adjustment of devices	12.3	$21,200

* Charges shown reflect figures for acute hospital care only and do not include professional fees, rehabilitation, follow-up care, or home care costs.

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Payers of Care

Who is Billed for Hospital Care?

Aggregate charges, or the "national bill," is the sum of all charges for all hospital stays in U.S. non-Federal community hospitals. The aggregate charges for 2002 are $650 billion—an increase of 32 percent from 1997, when the aggregate charges were $492 billion (adjusted for inflation).

Payer information is presented in five general payer categories as follows:

• Medicare— fee-for-service and managed care Medicare patients.
• Medicaid— fee-for-service and managed care Medicaid patients.
• Private insurance— Blue Cross, commercial carriers, private health maintenance organizations (HMOs), and preferred provider organizations (PPOs).
• Uninsured— an insurance status of "self-pay" and "no charge."
• Other— Workers' Compensation, Civilian Health and Medical Program of the Uniformed Services (CHAMPUS), Civilian Health and Medical Program of the Department of Veterans Affairs (CHAMPVA), Title V, and other government programs.

Payers of Hospital Care

• Medicare and Medicaid are billed for more than half (56 percent) of all hospitalizations. Medicare is billed for 34 percent and Medicaid is billed for 22 percent. This pattern has remained relatively stable since 1997, when the percentages were 35 percent and 20 percent, respectively.
• Private insurance is billed for 36 percent of all hospitalizations, which is comparable to the 1997 figure—37 percent.
• Uninsured hospitalizations continue to account for approximately 5 percent of all hospitalizations.
• The remaining 3 percent of hospitalizations is billed to other insurers or cannot be determined.

Select for Figure 10 (5 KB), Percent of Hospital Stays Billed to Each Payer.

Select for Figure 11 (5 KB), Percent of National Bill by Payer.

Medicare

• About 39 million individuals—13 percent of the U.S. population—are covered by Medicare.²
• Medicare continues to be billed for approximately 44 percent of the national hospital bill.
• The most common reason for hospitalization for Medicare beneficiaries is congestive heart failure, followed by pneumonia and coronary atherosclerosis.
• The aggregate total billed to Medicare is $283 billion—an increase of 29 percent from 1997, after adjusting for inflation.

Table 11. Top 10 Principal Diagnoses for Medicare

Top 10 Principal Diagnoses for Medicare	Number of Discharges (in thousands)	Medicare's Share of All Hospital Stays for this Condition (percent)
All Medicare Discharges	12,876	34.1
1. Congestive heart failure	745	70.4
2. Pneumonia	690	54.1
3. Hardening of the heart arteries (coronary atherosclerosis)	687	53.2
4. Cardiac dysrhythmias (irregular heart beat)	460	64.5
5. Heart attack (acute myocardial infarction)	430	56.2
6. Chronic obstructive lung disease	395	63.8
7. Acute cerebrovascular disease (stroke)	367	65.0
8. Osteoarthritis (degenerative joint disease)	330	60.0
9. Rehabilitation care, fitting of prostheses, and adjustment of devices	328	68.2
10. Chest pain	317	35.8

Medicaid

• About 33 million individuals, 12 percent of the U.S. population, are covered by Medicaid.²
• Medicaid continues to be billed for approximately 18 percent of the national hospital bill.
• Six of the top 10 most frequent reasons for hospitalization billed to Medicaid continue to be related to infancy and childbirth. These 6 conditions comprise 1 out of every 3 Medicaid hospitalizations.
• Medicaid is billed for nearly 40 percent of stays associated with infants born in the hospital (up from 34 percent in 1997) and 47 percent of all normal pregnancy and delivery stays (up from 40 percent in 1997).
• Previous C-section appears as a top 10 condition for Medicaid patients, rising from 15th in 1997 to 10th in 2002. Medicaid is billed for 38 percent of all previous C-sections.
• Medicaid is billed for 54 percent of all hospital stays for schizophrenia (up from 51 percent in 1997) and 33 percent of all stays for depression (up from 28 percent in 1997).
• Medicaid is billed for about 35 percent of all hospital stays for asthma, essentially unchanged since 1997.
• The aggregate total billed to Medicaid is $119 billion—an increase of 47 percent from 1997, after adjusting for inflation.

Table 12. Top 10 Principal Diagnoses for Medicaid

Top 10 Principal Diagnoses for Medicaid	Number of Discharges (in thousands)	Medicaid's Share of All Hospital Stays for This Condition (percent)
All Medicaid Discharges	8,264	21.9
1. Newborn infants	1,579	38.0
2. Trauma to vulva (external female genitals) and perineum (area between anus and vagina) due to childbirth	276	34.4
3. Pneumonia	259	20.3
4. Other maternal complications of birth and puerperium (period after childbirth)	259	37.3
5. Affective or mood disorders (depression and bipolar disorder)	213	32.6
6. Other complications of pregnancy	204	45.4
7. Normal pregnancy and/or delivery	188	46.8
8. Schizophrenia	153	54.2
9. Congestive heart failure	151	14.3
10. Previous cesarean section (C-section)	151	38.3

Private Insurers

• About 200 million individuals, 70 percent of the U.S. population, are covered by private insurers.²
• Private insurers continue to be billed for about 31 percent of the national hospital bill.
• Private insurers are billed for 54 percent of all stays for infants born in the hospital, 59 percent of all stays for trauma to vulva and perineum due to childbirth, and 46 percent of all normal pregnancy stays.
• Four of the top 10 conditions billed to private insurers are related to infancy and childbirth. These conditions comprise about 1 of every 4 private payer discharges—just as in 1997.
• Three of the top 10 conditions billed to private insurers are related to the cardiovascular system, as was the case in 1997.
• Unlike 1997, affective disorders (primarily depression) and previous C-section are in the top 10 conditions for privately insured patients in 2002.
• The aggregate total billed to private insurers is $203 billion—an increase of 31 percent from 1997, after adjusting for inflation.

Table 13. Top 10 Principal Diagnoses for Private Insurers

Top 10 Principal Diagnoses for Private Insurers	Number of Discharges (in thousands)	Private Insurers' Share of All Hospital Stays for This Condition (percent)
All Discharges for Private Insurers	13,735	36.3
1. Newborn infant	2,254	54.3
2. Trauma to vulva (external female genitals) and perineum (area between anus and vagina) due to childbirth	475	59.0
3. Hardening of the heart arteries and other heart disease	411	31.8
4. Other maternal complications of birth and puerperium (period after childbirth)	393	56.7
5. Chest pain	352	39.8
6. Spondylosis, intervertebral disc disorders (back problems, disorders of intervertebral discs and bones in spinal column)	303	47.7
7. Pneumonia	258	20.3
8. Affective or mood disorders (depression and bipolar disorder)	227	34.6
9. Previous cesarean section (C-section)	219	55.6
10. Heart attack (acute myocardial infarction)	218	28.6

Uninsured

• About 44 million individuals, 15 percent of the U.S. population, are uninsured.²
• Only 5 percent of hospitalized patients are uninsured at the time of discharge from the hospital, a figure unchanged since 1997. These individuals are billed for 4 percent of the national hospital bill.
• Hospitalizations for tuberculosis among the uninsured rose by 56 percent. Twenty-five percent of hospital discharges for this infection are for the uninsured, compared to 16 percent in 1997.
• Five percent of stays for infants born in the hospital are uninsured, just as in 1997, despite increases in coverage by the State Children's Health Insurance Program (SCHIP).^vii
• Among uninsured patients, 2 of the top 10 conditions are related to mental health or alcohol-related mental disorders. About 20 percent of hospital stays for alcohol abuse disorders and 8 percent of stays for depression are uninsured. It is not possible to determine if this finding is because insurance does not cover these conditions or because these conditions occur more frequently among uninsured patients. Substance-related mental disorders was a top 10 condition for the uninsured in 1997, but in 2002, it fell to 14th.
• Diabetes is an ambulatory care sensitive condition—a condition for which appropriate outpatient care should prevent the need for hospitalization in many cases. More than 8 percent of all diabetes admissions occur in patients who are uninsured.
• The aggregate bill for the uninsured is $25 billion—an increase of 39 percent from 1997, after adjusting for inflation.

Table 14. Top 10 Principal Diagnoses for the Uninsured

Top 10 Principal Diagnoses for the Uninsured	Number of Discharges (in thousands)	All Hospital Stays for This Condition That Are Uninsured (percent)
All Discharges for the Uninsured	1,815	4.8
1. Newborn infant	208	5.0
2. Chest pain	65	7.3
3. Affective or mood disorders (depression and bipolar disorder)	52	7.9
4. Alcohol abuse disorders	46	20.1
5. Pneumonia	43	3.4
6. Skin and subcutaneous tissue infections	42	9.7
7. Hardening of the heart arteries and other heart disease	41	3.1
8. Diabetes mellitus with complications	38	8.2
9. Heart attack (acute myocardial infarction)	32	4.2
10. Appendicitis	32	11.3

Aggregate Charges

The aggregate total billed for hospital care has increased significantly from 1997 to 2002 for each of the four major payer categories, with the largest increases in charges seen for Medicaid and the uninsured. In the 5-year period from 1997 to 2002, aggregate billing:

• Increased 29 percent for Medicare.
• Increased 47 percent for Medicaid.
• Increased 31 percent for private insurers.
• Increased 39 percent for the uninsured.

The percent of the population covered by each of these payer types has remained relatively stable from 1997 to 2002.^2,7

Select for Figure 12 (7 KB), Percent Increase in Aggregate Billing from 1997-2002.

Select for Figure 13 (5 KB), Percent of Population Covered by Each Payer Type, 1997 and 2002.

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^vii To evaluate the impact of SCHIP, individual States that record SCHIP as a specific pay source may be used for further study.

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Disposition Status

How Are Patients Discharged from the Hospital?

Discharge status indicates the disposition of the patient at discharge from the hospital. Categories include: routine (to home), to another short-term hospital, to a nursing home, to home health care, or against medical advice.

Discharge Status

• More than 75 percent of discharges are routine in nature— patients return home following completion of hospital treatment.
• Another 11 percent of discharges go to long-term care/other facilities, while 2 percent go to other short-term hospitals.
• Approximately 2 percent of all hospitalizations end in death, a figure slightly lower than in 1997.
• Less than 1 percent of patients leave against medical advice, as was the case in 1997.

Select for Figure 14 (6 KB), Discharge Status.

Discharges to Other Institutions

• Hospitalizations that result in discharges to other institutions tend to be those in which a patient's functional status has been compromised, such as stroke or hip fracture.
• Older patients are more often discharged from the hospital to other institutions than are younger patients. About 21 percent of patients ages 65-84 and 41 percent of patients ages 85 and older are discharged to long-term care and other similar facilities, including skilled nursing facilities, intermediate care facilities, and nursing homes.
• Only about 3 percent and 8 percent of patients ages 18-44 and 45-64, respectively, are discharged to long-term care.

Select for Figure 15 (7 KB), Percent of Discharges to Another Institution.

Table 15. Top 10 Principal Diagnoses for Discharges to Other Institutions

Top 10 Principal Diagnoses for Discharges to Other Institutions	Total Number of Discharges (in thousands)	Percent of All Discharges to Other Institutions
1. Pneumonia	282	5.5
2. Osteoarthritis (degenerative joint disease)	257	5.0
3. Acute cerebrovascular disease (stroke)	253	4.9
4. Hip fracture	240	4.6
5. Congestive heart failure	221	4.3
6. Heart attack (acute myocardial infarction)	219	4.2
7. Hardening of the heart arteries and other heart disease	181	3.5
8. Fluid and electrolyte disorders (primarily dehydration and fluid overload)	132	2.6
9. Urinary infections	125	2.4
10. Septicemia (blood infection)	120	2.3

Conditions With Highest In-Hospital Mortality

In-hospital mortality refers to hospitalizations in which the patient died during his or her hospital stay. Patients may be admitted to the hospital for end-of-life care; therefore, mortality for some conditions is expected to be high. Some of the conditions listed are not necessarily the underlying cause of death. For example, shock and cardiac arrest are immediate reasons for death, but other diagnoses, such as trauma, may be the underlying reasons.

• The two conditions with the greatest percentage of admissions resulting in in-hospital mortality^viii continue to be cardiac arrest/ventricular fibrillation (54 percent) and shock (52 percent).
• The two illnesses with the greatest numbers of in-hospital deaths are infection-related: pneumonia (70,890 deaths, not shown) and septicemia (61,439 deaths). However, the percentage of admissions for these conditions resulting in in-hospital death is much smaller than for many other conditions: 6 percent and 18 percent, respectively.
• Septicemia replaced coma as 1 of the top 10 conditions with the highest percent of in-hospital mortality. In 1997, septicemia was the 11th most common condition that resulted in in-hospital death; in 2002, it was the 7th, with nearly 18 percent of admissions resulting in death.
• Four of the top 10 conditions with the highest percent of in-hospital mortality are related to cancer, a fact unchanged since 1997. These diagnoses include malignant neoplasm without specification of site, cancer of the liver and intrahepatic bile duct, leukemia, and cancer of bronchus or lung.

Table 16. Principal Diagnoses with the Highest Percent of Inpatient Mortality

Principal Diagnoses with the Highest Percent of Inpatient Mortality	Number of Discharges	In-Hospital Mortality (percent)
1. Cardiac arrest and ventricular fibrillation (uncoordinated contraction of heart)	9,082	53.6
2. Shock	2,373	51.5
3. Intrauterine hypoxia and birth asphyxia (lack of oxygen to baby in uterus or during birth)	113	27.6
4. Cancer without specification of site	1,436	24.2
5. Adult respiratory failure or arrest	47,407	22.5
6. Aspiration pneumonitis (aspiration of stomach contents into lung)	34,562	18.3
7. Septicemia (blood infection)	61,439	17.6
8. Cancer of liver and bile duct in liver	2,552	16.3
9. Leukemia (cancer of blood)	6,804	16.1
10. Cancer of bronchial tubes and lung	22,015	14.6

Conditions With Highest In-Hospital Mortality by Age Group

• Among all age groups, the condition with the largest number of admissions resulting in in-hospital deaths is cardiac arrest and ventricular fibrillation. For infants younger than 1 year, 84 percent admitted for cardiac arrest and ventricular fibrillation die at the hospital, while 46 percent of cardiac arrest admissions for patients 18-44 result in death in the hospital.
• In the youngest age category, the greatest number of in-hospital deaths is attributable to prematurity and low birthweight—nearly 13,000 deaths.
• For children ages 1-17, hospitalizations for brain injury result in the greatest number of in-hospital deaths (1,151 deaths).
• For the 18-44 age group, brain injuries (4,369 deaths) and HIV/AIDS (3,693 deaths) account for the highest number of in-hospital deaths.
• For individuals ages 45-64, the largest numbers of hospitalizations ending in death are for stroke (11,163 deaths), septicemia (10,418 deaths), and cancer metastasis (10,264 deaths).
• For age groups 65 years and older, pneumonia results in the most in-hospital deaths (59,934 deaths).

Select for Table 17, Top 10 Conditions with the Highest Number of In-Hospital Deaths by Age Group.

Patients Leaving Against Medical Advice

• The most common conditions among patients who leave against medical advice involve medical problems, such as pneumonia or diabetes, rather than surgical problems. Chest pain, coronary atherosclerosis, pneumonia, congestive heart failure, and diabetes remain top 10 reasons for discharge against medical advice.
• Pancreatic disorders other than diabetes and skin/subcutaneous infections rank among the top 10 diagnoses in 2002 for patients who leave against medical advice, replacing asthma and schizophrenia, which were in the top 10 in 1997.
• Among the top 10 diagnoses for patients who leave the hospital against medical advice, three are mental health-related illnesses, unchanged since 1997. Among these top ten conditions, 17 percent of all discharges in which patients leave the hospital against medical advice are for substance- or alcohol-related mental disorders.

Table 18. Top 10 Principal Diagnoses for Which Patients Left Against Medical Advice

Top 10 Principal Diagnoses for Which Patients Left Against Medical Advice	Total Number of Discharges in Which Patients Left Against Medical Advice (in thousands)	Percent of All Discharges in Which Patients Left Against Medical Advice
1. Drug abuse disorders	29	9.6
2. Alcohol abuse disorders	23	7.4
3. Chest pain	19	6.3
4. Affective or mood disorders (depression and bipolar disorder)	14	4.8
5. Hardening of the heart arteries (coronary atherosclerosis)	10	3.2
6. Pneumonia	9	2.9
7. Congestive heart failure	8	2.7
8. Diabetes mellitus with complications	8	2.6
9. Pancreatic disorders other than diabetes	7	2.5
10. Skin and subcutaneous tissue infections	7	2.2

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^viii In-hospital mortality is a form of case-fatality ratio—the percentage of patients with this principal diagnosis who died while in the hospital.

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