Calif. hospitals could be wasting $10B annually: 5 things to know

A study of 275 hospitals in California indicated they could reduce inpatient costs by 25 percent — or $10 billion annually. The findings of the study, which was conducted by Murrieta, Calif.-based Axene Health Partners, is surprising because the state is often viewed as having a mature managed care marketplace and therefore having limited opportunity to cut costs.

The report is based on 2014 data from the Office of Statewide Planning and Development files, which includes length of stay, gross and net charges, scope of services, complexity and severity of care and other measures. Only data on general acute care hospitals was used, with the exception of Kaiser Permanente hospitals or others without sufficient discharge and cost data.

Here are five findings from the report.

1. Axene Health Partners found the greatest potential dollar savings in commercially insured patients, with a total of $3.7 billion in savings, or 25 percent improvement.

2. The greatest opportunity to improve efficiency was in Medi-Cal, or California Medicaid, patients. The potential improvement was 27.7 percent, which equates to $3.6 billion in potential savings.

3. Surprisingly, the California hospitals analyzed had discharges coded with 28 percent more complications and comorbidities than the national rates.

4. Los Angeles and San Francisco counties were the least efficient regions in the state, meaning they had the greatest savings potential.

5. According to the report, there was little difference between the efficiency of for-profit and nonprofit hospitals. Unsurprisingly, public hospitals were found to be the least efficient.


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