Press Release

Increased Cost of Health Care Due to Advances in Medicine and Technology, Greater Demand for Care

The demand for health care is rising due to advances in medicine, an aging population and a rising burden of chronic disease - at the same time the costs to provide that care are rising, according to a new TrendWatch report from the American Hospital Association (AHA).  However, despite the many factors driving health care spending, hospitals are taking actions to make care more affordable while providing quality patient care.  The report provides a more complete picture of issues and trends that impact health care costs including investments in new clinical technology, adoption of electronic health records, growing levels of uncompensated care for the uninsured and underinsured, and the workforce shortage.  

"Today's report reinforces that now is not the time to cut health funding for vital health care programs," said AHA President and CEO Rich Umbdenstock.  "With need for hospital services on the rise, hospitals will continue to be part of the national conversation on changes that improve care for all patients."  

According to the TrendWatch report, advances in care have allowed patients to live longer and healthier, with a better quality of life.  For example, medical advances are responsible for 70% of the improvement in survival rates for heart attack patients and two-thirds of the reduction in mortality for those suffering from cancer.   Less invasive surgery means patients can be discharged and recover faster, missing less time from work.  These advances, however, lead to higher standards of care and increased utilization, which can drive up costs. 

"Hospitals are centers of medical innovation, and treat the most acutely ill and injured patients," said Umbdenstock.  "While medical advances bring great benefits to patients, they can add to the demand for services and cost of providing each service."

America's older, sicker and growing population also contributes to the rising cost of care, the report found.  As people age they have more health problems and, consequently, consume more health care services.  The number of people with chronic disease among all age groups has increased as well, with an estimated 133 million Americans suffering from at least one condition, up from 118 million in 1995.  Some experts estimate that the combination of increases in chronic disease and technologies to treat them account for nearly two-thirds of spending growth over the past few decades. 

The rise in demand for care means hospitals need more employees than ever before - right at the time that hospitals are experiencing a workforce shortage, especially of nurses and physicians.  Wages and benefits for caregivers and other hospital workers represent 60% of a hospital's budget and are growing more rapidly for hospitals than for other service fields as hospitals seek highly-trained nurses and other specialized workers. 

"America's hospitals are actively looking for ways to reduce costs while ensuring patients receive high-quality care," said Umbdenstock.  "Hospitals will continue to be part of efforts to find solutions to increasing costs and will support real changes that improve care." 

Hospitals are taking action and are pursuing opportunities to reduce costs and improve care, employing IT and looking for ways to improve how they provide care.  For example, sending case managers to homes of patients with congestive heart failure to provide customized home health and education has led to a significant reduction in readmissions. 

To control spending on the national level, hospitals are calling for a better alternative to our current liability system, reducing barriers that get in the way of better coordination among hospitals and physicians, and increasing the focus on wellness and chronic care management, among others.  

TrendWatch compiles information from several independent sources, as part of a series of reports produced by the American Hospital Association highlighting important and emerging trends in the hospital and health care field.  A copy of the TrendWatch is available at

About the AHA

The AHA is a not-for-profit association of health care provider organizations and individuals that are committed to the health improvement of their communities. The AHA is the national advocate for its members, which include nearly 5,000 hospitals, health care systems, networks, other providers of care and 43,000 individual members. Founded in 1898, the AHA provides education for health care leaders and is a source of information on health care issues and trends. For more information, visit the AHA website at

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