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Hospitals Forced to Adjust Staffing and Budgets Due to Rising Drug Prices

January 23, 2019

Surging drug prices and frequent shortages are disrupting patient care and forcing hospitals to make budgetary cuts, according to a report from the American Hospital Association (AHA), the Federation of American Hospitals (FAH), and the American Society of Health-System Pharmacists conducted by the National Opinion Research Center (NORC).

NORC used this study to evaluate trends in inpatient and outpatient drug prices, spending, and shortages. This report builds on a previous study released in 2016 by AHA and FAH on costs and shortages.

Between FY2015 and FY2017, total drug spending per hospital admission increased by 18.5%. Broken down, outpatient spend increased by 28.7%. Inpatient drug spending increased by 9.6%, compared to 38% in FY2013-FY2015, according to the 2016 report.

Using data from surveys, interviews with key leaders in hospital management, and information from two group purchasing organizations, the report stated, “Hospitals have had to take several measures ranging from identifying alternative therapies, reducing staffing, and delaying investments to ensure continued access to medications for their patients.”

In one of the surveys conducted by AHA, nearly all of the 1184 hospitals reported having to make significant budgetary adjustments. Ninety percent reported having to find alternative therapies, 69% did more in-house compounding, 28% had to delay investing in new infrastructure, like replacement of equipment, 25% made staff reductions, and 17% cut offered services.

“Per-capita spending on drugs in the United States has grown significantly in recent years, with year-overyear growth reaching historically high levels in 2014 (12.4 percent) and 2015 (8.9 percent). This growth was driven primarily by changes in drug prices, including both higher launch prices and annual price increases, not utilization,” the report states.

NORC’s report goes on to explain that while the exponential growth of drug prices has slowed down since 2015, prices are still climbing and shortages make the situation even more difficult. “Hospitals and health systems continue to experience high annual growth in drug spending that far exceeds medical inflation and Medicare payment updates.”

—Edan Stanley



American Hospital Association. Recent Trends in Hospital Drug Spending and Manufacturer Shortages.

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