by David U. Himmelstein, Miraya Jun, Reinhard Busse, Karine Chevreul, Alexander Geissler, Patrick Jeurissen, Sarah Thomson, Marie-Amelie Vinet, and Steffie Woolhandler
The Coomonwealth Fund, Oct. 20, 2014
Administrative costs account for 25 percent of total U.S. hospital spending, according to a new study that compares these costs across eight nations. The United States had the highest administrative costs; Scotland and Canada had the lowest. Reducing U.S. per capita spending for hospital administration to Scottish or Canadian levels would have saved more than $150 billion in 2011.
Even as all nations struggle with rising health care costs, the United States remains an outlier. Several factors help explain higher costs in the U.S., among them, higher physician fees, a focus on specialist services at the expense of primary care, and greater use of advanced technology in medicine. Some studies also have noted the substantial administrative costs incurred by U.S. health insurers and providers, including costs associated with coding, billing, and similar activities. In this Commonwealth Fund–supported study, researchers sought to compare hospital administrative costs in the U.S. with those in Canada, England, Scotland, Wales, France, Germany, and the Netherlands, using data obtained for 2010 or 2011.