Hospital Department Cost and Employment Increases: 1980-92

Hospital costs have continued to rise at rates well in excess of inflation generally, even after the introduction of Medicare's per case prospective payment system (PPS). This article uses a hospital subscriber microcost reporting system to show trends in costs, wages, labor hours, and outputs for more than 50 individual departments from 1980-92. Descriptive results show dramatic growth in the operating room, catheter lab, and other technologically driven cost centers. Administrative costs also increased rapidly through 1988, but slowed thereafter. The paperwork billing and collection burden of hospitals is estimated to be $6 billion in 1992, or approximately 4 percent of total expenses.