$50 a Day--and Going Up

Since 1954 Dr. Crosby has been director of the American Hospital Association, and in 1963 he became its executive vice president as well. He grew up in Rochester, took his medical degrees at Albany Medical College and Johns Hopkins, and has had more than thirty years’ experience in the practice and teaching of medicine and the administration of hospitals.

WHEN Gary Winston entered the hospital last January, he had very little notion of what would happen except that his gallbladder would be removed. He had only a vague idea of the extraordinarily complex process of patient care that goes on in a hospital. Surgery, he knew, required doctors and nurses and anesthesia and an operating room, but he did not know that several dozen hospital employees would have a hand either directly or indirectly in his care.

Winston was somewhat surprised at the number of persons that he saw before he was taken to his hospital room. He would have been even more surprised at the number he did not see who had some task to perform simply because he had been admitted to the hospital. An admitting clerk took all needed information to complete his admission form and turned Winston over to a volunteer to take him to his room. When he left the admitting office, the clerk notified eleven other persons that Mr. Winston had been admitted to the hospital for surgery on the following day. Among these were the switchboard operator, the information clerk, the ward clerk, and the mimeograph operator.

The volunteer took Winston to the nursing unit, where the head nurse met him, looked over his admission form, and discussed with him certain routine admission requirements, such as a chest X ray and a blood count. She also introduced him to the nurses on the unit who would be caring for him during his hospitalization. At this point, Winston surrendered his admission form to the station clerk, who entered certain information on his patient record for the physicians who would be looking after him. A nurse’s aide then took him to his room. Once he had unpacked, he was brought to the radiological department and the clinical laboratory for an X ray, a urinalysis, and a complete blood count. Had he thought of keeping track of them. Winston would have realized that nine hospital employees had had direct contact with him during the admission procedure.

Shortly after he returned to his room, a house physician gave him a preoperative physical examination. a dietitian conferred with him about his postsurgical diet, an anesthesiologist dropped in to discuss what anesthetic would be used and its advantages, the surgeon stopped by to review his record and check the results of the examination. X ray, and blood work, and his own physician came in to reassure him and to say that he would participate in Winston’s postoperative care with the surgeon. When he finally settled down in Room 1575, Winston had been the subject of a series of closely coordinated activities designed to make his hospital stay as comfortable mentally and physically as possible, and to speed his return to health and the resumption of his normal activities.

Winston had the necessary cholecystectomy, which proved to be uncomplicated, recovered uneventfully, and returned home ten days later having lost his gallbladder and acquired a hospital bill of $520. No one could have told him in advance exactly the amount of his bill because the length of his hospital stay was not definite and it was not known what services he might require during his hospitalization. He knew, of course, that his semiprivate room would cost $30 per day. This charge covers what hospitals call “routine services.” But Winston’s bill averaged, apparently, $52 per day. Since $10 of the total covered his use of the telephone and rental of a television set, the actual daily average was $51. The $21 per day above the thirty-dollar room charge covers what hospitals call “special services.” Now let me try to analyze this $51 per day for you.

The two major components of all hospital care are routine services and special services. Routine services include room and board, nursing care, and minor medical supplies. Special services include, for instance, use of the operating room, anesthesia, drugs and laboratory tests, and physical therapy. All patients use approximately equal amounts of routine services, but patient use of special services varies greatly.

The routine services furnished Winston cost the hospital $30 per day. It would have cost a substantial portion of $30 every day even if his room had been vacant. The hospital must staff the nursing unit, furnish kitchen facilities and staff them, and employ maintenance, housekeeping, and laundry

personnel for 365 days a year. From the time Winston climbed into bed until he put on his street clothes to return home, it cost the hospital $30 daily to give him nursing care, a planned diet, and a clean room with a comfortable bed. Let me now break down this $30.

The skilled nursing care given to Winston during his hospital stay cost the hospital $9.95 per patient day, nearly one third of the thirty-dollar total cost of the routine services. This per diem cost of $9.95 for nursing care is obtained by dividing total nursing-service salaries by the number of days of patient care given by the hospital during a twelvemonth period. The $9.95 is an average figure, for Winston was given intensive nursing care during his immediate postsurgical days, but probably very little the day he was discharged. Since this is the usual pattern, hospital use of averaged nursing costs is both reasonable and practical.

Nursing salaries have risen sharply since World War II. This is true of other hospital employees’ salaries too. At the time of Pearl Harbor, a graduate professional nurse earned about $110 per month. Today, a nurse with the same qualifications would start at $460 per month. Since nursingcare costs are included in room rates, it would hardly be reasonable to expect a Pearl Harbor room rate of $8 per day. The increase has come about mainly because nurses were grossly underpaid for years, but also because they are now performing tasks of greater complexity, requiring more skill. Furthermore, their educational costs to acquire new skills are higher than in the 1940s.

In addition, hospitals operate around the clock all week long, which means three shifts every day, all of them requiring the presence of registered nurses. Licensed practical nurses and nurse’s aides render a great deal of help to the nursing staff, but they are limited by law and training in what they can do. The main burden of nursing care still rests on the registered nurse. She is the executor of the physician’s orders for his patient. She has the responsibility of seeing that his orders are carried out properly and of recording the patient’s reactions to therapy, tests, and other measures. Only she among the personnel staffing the nursing unit is qualified by training to detect signs and symptoms that indicate a patient is worsening, and then she must immediately notify the physician. Responsibilities that involve the lives of patients simply cannot be delegated to others.

Nearly every hospital we know of is short of nurses. What can a hospital do to overcome this shortage? Well, many hospitals have been conducting schools of nursing for years. In fact, the vast majority of all registered nurses now in practice have graduated from hospital schools of nursing, and in the foreseeable future, the majority will come from this source. But if a hospital runs a school of nursing, it must pay the cost. Since a nursing school directly benefits patient care, it is reasonable to add a portion of the cost to the patient’s bill. This does not appear, of course, as a separate item, but is included in other costs. All of us should remember that medical and nursing education is among the primary functions of a teaching hospital. On any one day, there are more than 300,000 persons engaged in educational programs in American hospitals.

LET me describe briefly the food-service complex that lay behind the delivery of a warm, nutritious meal to Winston three times a day for only $4.40. First, although hospitals prepare an enormous number of meals annually, they face several problems that hotels and restaurants do not. These problems include serving practically all meals to all patients in their rooms, a limitation that hotels and restaurants do not have to contend with. In addition, very few patients in a hospital are given the same diet. In a six-hundred-bed hospital, for instance, from 60 percent to 65 percent of the patients require special diets.

Hospitals attempt to prepare basic diets, which may number from five to eight, but the combinations called for by the medical and surgical conditions of patients will run between forty and fifty, including special preparations for tube-feeding and blender-feeding. A patient with a cardiac condition may be on a salt-free diet, but if he also has diabetes, he will be on a diet of no or low starch. If, added to this, he should require surgery, then he would be on a liquid diet, but still saltfree and low in starch. One hospital of more than 700 beds finds that nearly 400 patients require thirty different diets every day.

To prepare these requires about 200 food-service employees, including chefs, dietitians, and aides. In the metropolitan area of New York City, a hospital may have to pay from $10,000 to $14,000 per year to obtain a good chef. A graduate dietitian, who has also completed her year of internship. will command a starting salary of from $110 to $150 per week in the same area. And then there are the salaries of the other food-service personnel.

To sum it up, while Winston was in the hospital, he received meals that were probably more wholesome and better balanced than he would have received at home — all for a cost of $4.40 per day. Professional dietitians planned his meals, trained chefs or cooks prepared them, and other specially trained aides delivered them to him quickly to retain their qualities of flavor, warmth, and attractive appearance. Because of his gallbladder surgery, Winston required a special diet, one of the many that the hospital’s food-service department handled in stride.

Clean linen for Winston cost the hospital $1.21 per day; keeping his room clean and tidy cost $1.99; utility services and maintenance cost $3.78 — a total of $6.98 for laundry, housekeeping, and maintenance. Deducting this amount from the $15,65 balance now leaves $8.67 to account for in terms of the thirty-dollar cost of routine services.

Administering the vast complex of facilities and services that constitute a hospital costs $7.21 per patient day in the hospital where Winston had his operation performed. This covers the administrative costs, for instance, of admitting him to the hospital. Maintaining Winston’s medical record, which is vitally important to him, his physician, and the hospital, costs 70 cents per day. Other miscellaneous items of expense total 76 cents per day. Major items of hospital expense, then, total $29.24 per day, and minor items 76 cents per day, a total of $30.

This breakdown of the thirty-dollar-per-diem cost of routine services covers one major component of every hospital bill. The other major component, special services, varies according to the needs of the patient. Since Winston was a surgical patient, he required, for instance, anesthesia and use of the operating room. A patient who had had a stroke or a heart attack would probably not require these special services.

Patients requiring the same special services, such as anesthesia or the operating room, do not use the same amounts of these services. A patient undergoing brain surgery, for instance, would be in the operating room longer than was Winston, who had an uncomplicated cholecystectomy. The costs of special services cannot be averaged feasibly to provide a standard per diem rate as is done with routine services. The range of special services provided patients is simply too great.

When Winston entered the hospital, he knew that routine services would cost him $30 per day, but he did not know — nor did anyone — what the total cost of required special services would be. We know now that they totaled $210, or $21 per day. Included in this amount was $77.50 for use of the operating room, the largest single item of cost in the special services category, which covers both direct and indirect expenses of the operating room.

At this hospital, for each dollar of direct expense there is a corresponding indirect expense of 98 cents. Direct operating room expense, then, is slightly more than indirect expense. Direct expense includes salaries of personnel working in the operating room, cost of medical instruments and supplies, and miscellaneous expenses, such as maintenance of surgical lights and operating table. Salaries account for nearly 49 percent, medical supplies 30 percent, medical instruments 9 percent, and maintenance 12 percent. So. roughly, $20 of the $77.50 cost for use of the operating room went for the salaries of the operating room nurses.

THE indirect expenses associated with Winston’s use of the operating room can be broken down as follows: 31 percent for administration (salaries and office expense); 17 percent for laundry and linens; 12 percent for salaries of interns and residents (these are medical education costs); 9 percent for nurse education; 6 percent for depreciation of operating room equipment (such as table and lights); 6 percent for plant maintenance; 4 percent for utilities; 3 percent for plant depreciation; and the balance for other miscellaneous items, such as employees’ health and welfare benefits. These expenses plus the direct expenses made up the cost of $77.50 for use of the operating room to remove Winston’s gallbladder.

Of course, Winston used many other special services too. The cost of his chest X ray, $10, of a complete blood count, $7.25, and of a urinalysis, $2.50, appears on his bill. Anesthesia supplies cost $10, and examination of the excised gallbladder by a pathologist cost $12. Good medical practice dictates the careful examination of all tissue removed at surgery. By this means, unsuspected or undiagnosed cancers, for instance, are not overlooked. thus providing a better chance of cure.

Since postoperative infections do occur, in spite of all precautions, Winston’s physician ordered some sensitivity tests performed to determine whether, if antibiotic treatment became necessary, his patient might react unfavorably to any of the drugs commonly used to treat infections. This possibly life-saving measure cost $7.25. Since his physician probably told him of the advisability of this test, he will regard it as another evidence of good medical care.

$51 A DAY (for 10 days)
ROUTIN ESERVICES $30 A DAY SPECIAL SERVICES $210
Nursing Care $9.95 Operating Room $77.50
Three Meals 4.40 Chest X ray 10.00
Clean Linen 1.21 Blood Count 7.25
Clean Room 1.99 Urinalysis 2.50
Utilities 3.78 Anesthesia 10.00
Administration 7.21 Biopsy 12.00
Medical Record 0.70 Various Tests 49.00
Miscellaneous 0.76 Medication 41.75

After surgery, Winston was placed on an intravenous solution of glucose and sterile water to prevent dehydration and to nourish him until he could again take food by mouth. Perhaps other substances were added to the solution to prevent an electrolyte disturbance, which may develop after surgery from either loss of fluids or the effect of the operation itself. The cost of this solution to speed his recovery to health is around $3 for each bottle.

Following surgery, Winston’s physician kept careful check on his patient’s progress. He ordered various tests of blood and urine and a throat culture to ensure that no occult infection was developing. The cost of these is included in his bill.

The culture cost $4.75, another urinalysis $2.50, and various blood tests, including a complete blood count, $34.50.

He received drugs too. Quite apart from any question of infection, he probably was given atropine or its equivalent before surgery to reduce mucous secretion, thus making for a safer and easier anesthesia. Possibly, others were administered after surgery to overcome the effects of the anesthetic and to reduce the abdominal discomfort that frequently follows this type of surgery. The drugs administered before, during, and after surgery cost $35.15, bringing total costs of special services to $206.40. Other items, such as disposable and medical supplies used in surgery, bring the total to $210.

Summing up the explanation of this $510 bill for a ten-day hospital stay, an average of $51 per day, we find that $300, or $30 per day, went for the cost of room and board and nursing care, and $210, or $21 per day, went for the cost of the special services required by Winston. Although his bill reflects what his medical condition required in the way of hospital care, it is representative in its major components of the millions of hospital bills that are issued annually in the United States.

It should be remembered, however, that many factors influence hospital costs. Among these are size and type of hospital, physical plant layout, geographical location, salary rates in the community, costs of construction and maintenance, federal legislation providing hospital care at government expense for certain segments of the population, costs of health education, and free services rendered by the hospital to indigent patients. All these factors vary from hospital to hospital and from region to region.

I mentioned the volunteer who conducted Winston to his room. Hospital volunteers make a tremendous contribution to patient care, and their unpaid services provide amenities not otherwise available to patients. In many hospitals, they perform such services as manning the gift shop, the coffee shop, and the information desk.

The enactment of Public Law 89-97 (Social Security Amendments of 1965), commonly called Medicare, will be a great boon to hospitals financially. Both hospitals and the medical profession have given thousands of hours of free care every year since the profession and hospitals took root in this country. Medicare will lift this enormous financial burden from hospitals and enable them to improve their facilities, broaden their services, train their personnel on a continuing basis, and take other steps to continue the improvement of patient care.

Medicare will not stop the rise in hospital costs, but, like other measures, it will help to retard the rate of rise. Hospital costs have been rising by 7 or 8 percent per year for a number of years now, mainly because of the salary lag between industry and hospitals. Hospitals have been overcoming this lag to some extent, but a gap still exists. It will have to be virtually closed if hospitals are to attract the competent personnel required to furnish the kind of hospital care to which Americans have become accustomed.

Hospitals are seeking to control costs by the introduction of various accounting and management techniques that have proved successful in business and industry, such as the use of computers. But one cannot “computerize” the services of a nurse or an X-ray technician or a physical therapist. Automation has been introduced into the hospital clinical laboratory, and into the hospital business office and the medical records department in some instances. Doubtless, as techniques are refined and as equipment is produced that is less expensive, hospitals will expand their use of these machines. However, as business and industry are finding, installation of a computer does not necessarily reduce the number of personnel required by a particular organization. Where hospitals are concerned, it is mainly patient safety that dictates the use of computers, not reduction of personnel.

Although hospitals are distinct from business and industry, they are also affected by social and economic trends and factors that are not within their control. In addition, medical advances and technological developments all contribute to the upward spiral of hospital costs. For instance, when hospitals began preparing for open-heart surgery, it was found that the investment in facilities, equipment, and personnel cost $75,000 — before the first patient was admitted for surgery. These costs must be allocated among all patients entering that hospital or be underwritten by grants or gifts. Perhaps a large hospital bill will seem a little less undesirable when one considers these factors.

Hospital costs will have to be controlled by the public, the government, and the hospitals. Hospitals will have to obtain maximum efficiency from personnel and equipment and control costs as effectively as possible. Government will underwrite the medical care of the indigent, thus relieving hospitals of this heavy burden. And patients will help too, by not insisting on unnecessary or unnecessarily prolonged hospitalization just because they have hospital insurance. It is a three-way partnership to which we all must contribute for the benefit of all.