Employee Wages and Rising Drug Equipment Prices Present Cost Challenges

Reducing the cost of care requires identifying and analyzing spending in a range of areas such as wages, prescription drugs, food, medical instruments, utilities, and professional insurance. Wages and benefits account for almost 60 percent of inpatient hospital costs, reflecting the importance of people in the care process.

Rapidly escalating drug prices also present challenges. Inpatient prescription drug spending increased by 38.7 percent per admission between 2013 and 2015. Medical devices also factor into the cost of care. Lifesaving items such as cardiac defibrillators typically cost more than $20,000, while higher complexity models can cost approximately $40,000. Common items such as artificial knees and hips often cost more than $5,000.

Employee Wages and Benefits Constitute the Largest Percentage of Costs for Inpatient Hospital Services