Study Finds SE Wisconsin Health Systems Successful in Moderating Health Care Costs

Mary Kay Grasmick, 608-274-1820, 575-7516

MADISON (July 23, 2014) ----- A study released today by the Greater Milwaukee Business Foundation on Health, Inc (GMBFH) clearly shows that the commitment that hospital systems in southeast Wisconsin have made to reduce health care costs and increase the quality of care are working to the benefit of employers.

The study found that average commercial insurance premiums in southeast Wisconsin have continued to moderate and improve compared to other Midwest markets. This is due to several factors, including: 

  • Hospital operating costs have increased at a substantially lower rate than national indices. The study found that average southeast Wisconsin hospital operating costs increased less than 2 percent annually 2003 through 2012, and less than 1 percent annually from 2009 through 2012. Every health system had operating cost increases lower than the change in the CMS hospital Market Basket index, while three of the six health systems had net operating cost increases considerably below the change in the Hospital PPI, and two were right at the 34 percent national Hospital PPI figure.

  • The average southeast Wisconsin hospital commercial payment levels increased about 3.5 annually from 2003 through 2012. This increase was about one-half of the 75 percent total increase in the national Hospital Component of the CPI for the same period.

"WHA members' dedicated efforts to increase efficiency, improve quality and deliver better outcomes are translating into solid progress when it comes to slowing the price of hospital care in southeast Wisconsin.  There is still much work to be done when it comes to moderating health insurance premiums, but the commitment that hospitals have made to deliver better value for employers’ health care dollars is a hallmark of Wisconsin and yet another reason for employers to locate and grow in our great state," said WHA Executive Vice President Eric Borgerding.

While health systems have made significant strides in increasing efficiency and improving quality, cost shifting from government programs and rising levels of bad debt and charity care continue to vex providers and payers alike. Cost shifting increased health care costs by 35 percent to employers in southeast Wisconsin in 2012, according to the GMBFH study, which was conducted by the consulting firm of Milliman.

“Cost shifting is the anchor that will continue to drag us down and threaten our ability to compete for and attract employers to our state,” according to Borgerding. “When government programs fail to even cover the costs of the medical services for their beneficiaries, those shortfalls must be shifted to others, becoming a ‘hidden tax’ on our employers and other payers. That has a dampening effect on the progress we are making to address health care costs in Wisconsin.”

WHA applauded the study’s sponsors for their continued focus on moderating health care costs by facilitating a meaningful dialogue between the employer and health care communities.

"We are proud of the innovative partnerships that exist among Wisconsin hospitals, health systems and employers that have fostered the significant and sustained results documented by this study,” Borgerding said.