Study Blames High Hospital Expenses on Administration

Article excerpt

N.Y. Times News Service

Adding fuel to the debate on the nation's health care system, a study has found that administrative costs account for one of every four dollars spent on hospital care, the highest proportion yet measured.

The authors of the study, published in Thursday's issue of The New England Journal of Medicine, say bureaucratic costs in American hospitals are more than double those in Canada, where the government pays for most health care directly, using tax money. The researchers also say the United States could save $50 billion a year in hospital costs alone, and a similar amount in insurance overhead and paperwork, by adopting a Canadian-style system.

But other experts, while agreeing on the need for a drastic overhaul of administrative costs, say a government-run system is not the best way to make medicine more efficient.

Among the factors increasing the amount of paperwork in hospitals are the need to deal with a multitude of insurers with different billing, payment and oversight policies, efforts to collect unpaid fees and to cover the costs of the uninsured and meeting complex state and federal regulations.

Two authors of the new study, Dr. Steffie Woolhandler and Dr. David U. Himmelstein, both of Harvard Medical School, are leading advocates of a Canadian-style "single-payer" system and longtime critics of administrative waste in American health care. While they have reported similar findings in the past, their new study is more comprehensive. It is based on federal reports filed by nearly all the hospitals in the United States for the fiscal year 1990, and it found an even higher level of administrative expense than before.

The study found that administrative costs ranged from 20. …