U.S. and Canadian hospital costs compared

Health Care Financing Review, Spring, 1993

A new study by the National Bureau of Economic Research (NBER) research associate Victor Fuchs and Dr. Donald Redelmeier of the University of Toronto reveals that Canadian acute-care hospitals have more admissions, more outpatient visits, and more patient days per capita than U.S. hospitals, but spend appreciably less. Their work, published in the New England Journal of Medicine and as NBER Reprint No. 1777, concludes that higher administrative costs in the United States, and more intensive use of equipment and personnel in Canada, explain much of this difference.

Using 1987 data on acute-care hospitals in the United States and Canada, and selected hospitals in California and Ontario, Fuchs and Redelmeier find that the United States had fewer beds (3.9 versus 5.4 per 1,000 population), fewer admissions (129 versus 142 per 1,000 population), and shorter average stays (7.2 versus 11.2 days.) However, expenditures per capita were 26-percent higher in the United States.

The United States also had a 14-percent more complex case mix, and 4 percent higher prices for labor, supplies, and other hospital resources, than Canada. On the other hand, Canadian hospitals provided relatively more outpatient care and emergency visits (320 versus 677 per 1,000 population). After adjusting for these facts, the authors still find that hospitals in the United States use 24 percent more real resources per (adjusted) admission than in Canada; the differential between California and Ontario was 46 percent.

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