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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