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NH think tank says it's time for hospital spending caps

New Hampshire Union Leader

January 24. 2013 8:48PM

CONCORD - Rising staffing costs at hospitals are responsible for more than half of the increase in the cost of health care in New Hampshire, a private study group has concluded.

The New Hampshire Center for Public Policy suggests that the best way to control the cost of health care in the state may be to cap the money that can be spent by hospitals and let the experts figure out how to make it work.

Citing as an example a 42 percent increase between 2004 and 2009 in the cost of treating an acute heart attack, Stephan Norton, the group's executive director, told members of the House Finance Committee that outsiders lack the specialized medical knowledge needed to decide the issue.

"Understanding what is happening at the service level is next to impossible unless you're a physician yourself," he said. "The conclusion that we are coming to is that the best thing that we can possibly do is to cap spending in some way and let the people who know what they are doing regulate it and manage it themselves."

The concept of hospitals being presented with an upper limit on expenditures was not one immediately embraced.

"This is mind boggling in a free-market economy," said state Rep. Neal Kurk, R-Weare.

The group's report said hospital expenses in New Hampshire increased $1.8 billion over several years, with employee costs leading the way.

"Much of the growth is likely explained by increases in staff and the associated costs," Norton said. "If you're really looking within the health system, half the growth is associated with additional personnel."

Private health insurance paid 44 percent of the increase in health care costs from 2000 to 2010. Medicaid and Medicare paid 34 percent and individuals reached into their own pockets for co-payments, deductibles and self-pay care to fund about 11 percent of the total increase.

Norton said the group is exploring policy changes to lead hospitals into new innovations and developing ways to "do care differently" at less cost.

"This is something Vermont is trying to do and Washington state is trying to do, and Massachusetts has passed a bill with 500 pages to somehow manage the health care cost," Norton said. "No one has done it successfully, but it's certainly worth considering."

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