It comes as no surprise that healthcare is one of the most booming and ever-evolving industries worldwide. The hospitals and other healthcare centers provide high-quality care so that every individual can live the best life. Although the healthcare industry’s primary objective is to treat patients, today, the industry is no more patient-centric; instead, it is a business. Due to this reason, healthcare costs are on the rise from time to time. The increase in healthcare costs has caused massive disruption among patients and service care providers.
Although, the healthcare industry adopted various strategies to control massive cost increase. However, every effort to control the cost has gone down the drain, and the problem remains in its place. These strategies include managed care services, cost-sharing, price-control, and many other techniques. One thing is for sure, controlling healthcare costs requires a robust plan. However, before strategizing a solid plan to control the growing cost, it is vital to determine the reasons leading to increased healthcare costs.
Read on below some of the crucial reasons to understand why the healthcare costs are skyrocketing:
- ADMINISTRATIVE COSTS
There is no denying that a healthcare administrative job is highly lucrative. The government spent millions of dollars every year on healthcare administration. However, one critical factor contributing to the rise in healthcare administrative spending is Billing and Insurance Related (BIR) costs which are approximately $496 billion. These overhead spendings include claim reconciliation, submission, and payment processing. Moreover, the failure of the administrative department to eradicate fraudulent activities in billing and misrepresenting medical information is another issue in healthcare management. It could lead to avoidable prescriptions and medical procedures.
With the increasing issues in healthcare, more and more universities are now offering on-campus and online education programs for students who wish to contribute to the healthcare system. Students can now enroll themselves in advanced education programs such as an online MBA in health administration to build a career in the evergrowing field. Earning a master’s degree can help aspiring individuals learn how to manage cost budgeting and devising policies for improved healthcare services.
- INCREASE IN CHRONIC DISEASES
Another leading cause of rising healthcare costs is the increase in chronic health problems. Some of the primary health problems that can cause death are cardiac arrests, pulmonary disorders, stroke, and cancer. These diseases require long-term care and special attention. Sometimes, these health issues even restrict the daily life routine, thus adding assistance and home-based care expenses. In the US, the median price of treating diabetes alone was $9,601 per person in 2017. People often get tired of medications and retrench expenditures. The truth is people can easily prevent these diseases or treat them at the right time to save cost.
- LACK OF INFORMATION
The inefficient services and the absolute lack of transparency have caused a spike in the prices. Many people claim to believe the rising costs; however, it’s hard to comprehend the reasons behind it with the complex medical billings and records. Regardless of all the online services and technology, it isn’t easy to understand the treatment methods and the high costs of each treatment.
Even when any treatment option isn’t practical or has the tendency to cause harm, it takes so much time for the doctors to change their practices. Also, the healthcare facility’s list of products and services contains medical codes that aren’t possible for an ordinary person to understand.
- DRUG PRICES
Another crucial reason for the massive rise in healthcare costs is drug prices. According to Bloomberg, an average person spends $1,200 per year on prescribed drugs. Precision medicine and specialty pharmaceuticals are two main driving reasons for the rise in drug prices. Specialty pharmaceuticals are experimental drugs that treat chronic illnesses and cancers. Drug manufacturers develop these drugs through genetic data to provide personalized treatment. Due to its sensitive and complex nature, it is costly to prepare and distribute such medicines.
Furthermore, drug pricing strategies also play a part in increasing healthcare costs. Depending on products’ valuation, drug manufacturers set a price list. However, manufacturers can also increase the price at their discretion. Consequently, only a few laws and regulations can prevent this inflation.
- EXPENSIVE TECHNOLOGY
The technological advancements in the healthcare sector have provided significant benefits in improving people’s life. However, these medical advances are also the reason for inflation in healthcare costs. Sometimes healthcare representatives fail to handle expensive medical technologies such as telemedicine, robotic surgery, electronic medical records, drugs, and many others carefully. While different technologies can bring better outcomes for patient treatment, there is no denying that utilizing these technologies increases healthcare costs substantially.
- AGING POPULATION
It is hardly surprising that the aging population also constitutes the increase in healthcare costs. Most of the increased healthcare costs are due to inpatient care and hospital services for older people. As the population increases and the baby boomer grows faster, more people look out for medicare services. Older people are more subject to chronic diseases, which further results in increased costs of healthcare services. Therefore, the need to improve the current healthcare system and the older people’s health conditions are more critical than ever.
The cost of medical services has grown dramatically over the past few years. Many factors contributed to these increasing costs, such as the discrepancies in services and the chronic diseases played a significant part in increasing the healthcare costs. Other significant causes include lack of information, increase in drug prices, use of expensive technology, and the rise in healthcare needs of the aging population.