Why does your hospital cost so much? Maybe it’s because it’s too nice

It's no secret that health care in the United States is the most expensive in the world – by a lot. We spend about 50% more than the second most expensive country, Norway.

Why does our health care cost so much? It isn't because it produces better outcomes, judging by key measures, such as life expectancy, infant mortality and the treatment of chronic disease.

However, some of the care we receive is delivered with exceptionally nice amenities. And these can be expensive.

Expensive amenities are increasingly found in hospitals. A recent story in the New York Times described a trend of providing luxurious add-ons similar to those you might find in an upscale hotel. Uniformed valets and professional greeters welcome patients at many facilities, and once in their rooms, patients can order food from 24-hour room service along with in-room massages.

Until recently, luxuries like these were found mostly in a small number of hospitals outside of the United States that cater to wealthy medical tourists from around the world.

Why are hospitals in the United States joining the trend? The answer is market competition. Hospital profitability depends on attracting patients. When choosing a facility, who wouldn't want one that throws in a massage?

But it is not clear that pampering patients results in better outcomes. Some argue that it does by reducing the stress and anxiety of a hospital stay. While there is evidence for positive effects from patient-focused features that are directly tied to patient case, such as better nurse-to-patient ratios, it is less clear for resort-style add-ons.

And luxuries are expensive. Hospitals have claimed that they do not affect patient bills because donations and grants cover much of the cost, and patients pay for some extra services out-of-pocket.

But additional amenities are part of larger marketing strategies. These can inflate operating costs that form the basis for setting reimbursement rates. Individual patients may not notice the cost, but we all ultimately pay it in higher insurance premiums and higher government spending for Medicare and Medicaid.

There's nothing wrong with trying to make the stressful experience of a hospital stay as comfortable as possible. And patients seem to value amenities when choosing a hospital. But marketing and luxury add-ons are helping to make our health care system the most expensive in the world.

Is this the way we really want to spend our money?

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