December 19th, 2024 – From hospital care to insurance administration, every dollar spent plays a part in maintaining and improving Colorado’s healthcare infrastructure.
Breakdown of healthcare dollars’ allocation:
- Hospitals consume the highest percentage of every healthcare dollar (40.7%, in total) and it’s expenses are broken into 3 major categories:
- Outpatient Hospital Costs (19.9%): These are payments for physician and facility services (excluding emergency room care) related to treatment in hospital outpatient departments.
- Inpatient Hospital Costs (17.6%): This includes the cost of prescription drugs administered during a hospital stay, as well as payments to physicians and the hospital itself.
- Emergency Room Costs (3.2%): This covers physician and facility payments for emergency room services and ambulance transportation.
- Prescription drugs (24.2%): Prescription drugs account for nearly one-quarter of healthcare spending.
- Doctor Visits (11.6%): This category includes payments for non-drug-related outpatient services provided during visits to doctor’s offices, clinics, and urgent-care centers.
- Other Outpatient Care (7.1%): This encompasses outpatient services not provided by hospitals, doctor’s offices, or clinics, such as those from ambulatory surgery centers, labs, dialysis, or home care.
- General and Administrative Costs (4.3%): These are the operational expenses to run healthcare businesses, including salaries, equipment, rent, legal fees, advertising, and utilities.
- Taxes and Fees (3.4%): This includes all taxes and assessments paid by the health insurance plan.
- Other Fees and Business Expenses (3.3%): These costs cover direct sales salaries, agent and broker commissions, and insurance rebate payments.
- Profit (2.4%): This represents the profit margin for for-profit health insurance plans or the surplus for not-for-profit plans.
- Cost Containment (2.2%): This includes expenses for claims adjustments, fraud detection, case management, and managing provider and prescription drug networks.
- Quality Improvement (0.8%): This budget goes toward efforts aimed at improving health outcomes, such as reducing hospital readmissions, improving patient safety, promoting wellness, and implementing health information technology.
Understanding where each healthcare dollar goes is important. As this breakdown shows, the lion’s share of direct care costs are spent on hospital care and prescription drugs with physician visits coming in at a distant third place.
Resources used: Data from AHIP
