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Why are Costs So High?. Chapter 12 Code Blue Health Science Edition 4. Chapter 12. In chapter 12, David Brannan is struggling with a reversal in the family’s financial situation. Financial problems are not unusual in the United States. Each year thousands of people declare bankruptcy.

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Why are costs so high

Why are Costs So High?

Chapter 12

Code Blue Health Science Edition 4

Chapter 12
Chapter 12

  • In chapter 12, David Brannan is struggling with a reversal in the family’s financial situation.

  • Financial problems are not unusual in the United States. Each year thousands of people declare bankruptcy.

Financial difficulties
Financial Difficulties

  • Individuals facing financial difficulties have one of two choices:

    • Increase income, or

    • Decrease expenses

Financial difficulties1
Financial Difficulties

  • Individuals should figure out what decisions and actions have got them into difficulties they are facing.

Brannan community hospital
Brannan Community Hospital

  • Brannan Community Hospital is also suffering from financial difficulties.

Brannan community hospital1
Brannan Community Hospital

  • Unless the situations changes, the hospital will close, throwing over a hundred employees out of work and decreasing access to hospital care in the community.

Brannan community hospital2
Brannan Community Hospital

  • Initially Wes Douglas realizes that he has three options: increase revenues, decrease costs, or both.

  • Before he decides whether he should tackle the problem of revenues or costs first, he realizes that he needs to understand a little more about the industry.

Healthcare costs
Healthcare Costs

  • In the next four chapters, we are going to discuss a crisis in the healthcare delivery system caused by out of control costs.

  • We will look at the cause of the problem, and some solutions being offered—solutions that will dramatically impact the lives of future healthcare professionals.

Major national problem
Major National Problem

  • Increasing healthcare costs are a major problem for most companies and their employees.

Major national problem1
Major National Problem

  • Many companies are finding that they can no longer afford to provide coverage for their employees.

    • Some are dropping health insurance as a benefit.

    • Others are moving jobs overseas where healthcare costs are less.

Major national problem2
Major National Problem

  • This has led to the enactment by Congress of the Patient Protection and Affordable Care Act

  • We will be discussing this further later.

Health expenditures
Health Expenditures

  • In 2013 it is estimated that the country will spend $3 trillion on healthcare.

  • It is estimated this expenditure will double in the next seven to ten years.

  • If this occurs, many Americans will be unable to afford the cost of basic care.

Us health expenditures 1992 2012
US Health Expenditures 1992-2012

Expenditures add nine (000,000,000)



Chapters 13 through 16
Chapters 13 through 16

  • Why are healthcare costs so high?

    • Technology

    • Unreimbursed care

    • An aging American population

    • Lack of adequate incentives for cost control


  • Technology has provided the ability to save lives that would have been lost just a decade ago.

  • No one wants to return to 1990s medicine, but few are willing to pay the cost.

Unreimbursed care
Unreimbursed Care

  • Much of the care hospitals provide is not paid for by the individuals receiving it.

    • Some hospitals collect less than 50% of billed charges.

  • These costs must be paid by those patients who do pay.

Unreimbursed care1
Unreimbursed Care

  • Reasons for Unreimbursed Care

    • Underpayment by government programs such as Medicare and Medicaid

    • Discounts negotiated by large insurance companies

    • Uninsured patients who receive care, but cannot or do not pay for the services they received

    • Charity care

An aging american population
An Aging American Population

  • When American soldiers returned from World War II, many started families.

An aging american population1
An Aging American Population

  • The children of these soldiers were known as the “baby boomers,” due to a rapid increase in births in the late 1940s and early 1950s.

  • These baby boomers are now becoming senior citizens.

  • Older people have significantly higher healthcare costs per year than younger people.

An aging american population2
An Aging American Population

  • In addition, people are living longer!

Lack of incentives for cost control
Lack of Incentives for Cost Control

  • To be discussed in the next chapter