US hospitals have highest administrative spending costs in the world

Hospitals in the United States have the highest administrative costs in the world, according to a study published in Health Affairs.

Researchers analyzed data from eight countries with various types of healthcare systems: Canada, England, Scotland, Wales, the U.S., Germany, France and the Netherlands. They found administrative costs, which researchers say include the costs of a clinic receptionist and employee benefits, in the U.S. made up a greater percentage of total hospital expenditures than all other countries analyzed--25.2 percent. That was more than twice the percentages in Canadian and Scottish hospitals, which were tied for last.

The differences came into sharper focus when looking at administrative spending as a percentage of gross domestic product (GDP). Researchers found administrative costs ranged from 0.41 percent of GDP, or $158 per capita, in Canada to 1.43 percent, or $667 per capita, in the U.S.

Within the U.S., administrative costs were higher at for-profit hospitals (where they comprised 27.2 percent of hospital spending) than nonprofits (where they represented 25 percent) and public hospitals (where they represented 22.8 percent). Administrative costs were below average at teaching hospitals and rural facilities, representing less than 25 percent of spending in both cases.

What's more, administrative costs grew in the U.S., according to the study, with administrative spending increasing from 23.5 percent of total hospital spending in 2000 to more than 25 percent in 2011. Administrative costs in Canada fell 0.5 percent during the same period.

This is just the latest news that U.S. healthcare is far ahead of other Western nations in spending. A June report by the Commonwealth Fund found U.S. per capita healthcare spending is more expensive than that of 10 other industrialized Western nations, but last in quality. U.S. healthcare spending, at $8,508 per capita, far outflanks the second-most expensive system, Norway's, with per capita spending of $5,669, FierceHealthcare previously reported.

To learn more:
- read the study abstract

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