5 findings on hospital costs in the Midwest

Hospital costs vary widely among the Midwestern states of Indiana, Michigan and Wisconsin, according to a recent report by the Center for Healthcare Research & Transformation.

Indiana, Michigan and Wisconsin were chosen for the study based on their diverse healthcare policies and market conditions. The report analyzed hospital costs at the state level and hospital profit margins in Detroit, Indianapolis and Milwaukee — the largest city in each state. The CHRT analysis is based on financial data from fiscal 2013 Medicare cost reports.

Here are five findings from the CHRT report.

1. In fiscal year 2013, per capita hospital costs in Michigan were $2,624, lower than Indiana ($2,975) and Wisconsin ($3,107).

2. Hospital and health systems in Milwaukee had the highest operating margins of the three cities analyzed. With operating margins ranging from 4.1 to 12.2 percent, the Milwaukee hospitals and health systems had operating margins exceeding the national benchmark of 2.2 percent.

3. Hospitals and health systems in Indianapolis also generally had operating margins above the national benchmarks. However, most Detroit hospitals and health systems had operating margins below the national benchmarks.

4. "Difference in the states' health insurance markets, and certificate of need laws that regulate hospital construction and investment in technology are likely two factors contributing to the variation we see between hospital costs in these cities," said Marianne Udow-Phillips, director of CHRT.

5. Hospitals and health systems in Wisconsin likely have reduced bargaining power with insurers due to the state having "the most fragmented health insurance market in the nation," according to Ms. Udow-Phillips. This likely contributes to the high hospital costs in Wisconsin. Additionally, Michigan has certificate of need laws, while Indiana and Wisconsin do not.

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