Through strict regulation of all hospital rates in the state, a Maryland commission has held hospital cost increases well below the national average, the commission reported yesterday.
For Marylanders, the cost of hospital care rose only 9.7 percent over the past two years while the national average climbed 15.8 percent. Before the commission began regulating costs three years ago, Maryland's cost increases were above the national average.
The commission claims in its report to have saved Maryland residents some $70 million by holding down rate increases.
"Such a savings is unknown is this country," claimed Alvin M. Powers, chairman of the Maryland Health Services Cost Review Commission at a news conference yesterday.
The commission, which has been in action since 1974, is the first in the country to fully regulate all hospital rates. Last summer, the commission received permission from the federal Department of Health, Education and Welfare to regulate the rates charged for Medicare and Medicaid patients.
Even with the reducation in escalating health costs, Marylanders still pay more than the average American for hospital care. That, commission officials said, could never change since Maryland is also one of the wealthiest states, with a high standard of living.
Much as state utility commissions review and approve gas and electricity rates, Maryland's health commssion has been reviewing hospital budgets and approving rates charged patients.
"We approve hospital budgets and rates and its up to the hospitals to make a profit by out-performing the budget," said Harold A. Cohen, the commission's executive director.
Cohen said the hospitals have actually managed to increase their profits, doubling the average profit, in fact, in the last year.
Efficient budgetting along with a reduction in labor costs were the main reasons behind the savings, Cohen said. In 1976 the average hospital in Maryland had an operating loss of $10,271, while one year later that changed to profit of $119,378.
"Sixty-five percent of hospital costs are labor. By telling hospitals to hold down wages - for unions and professionals. We kept them from passing on the higher costs to the patient," Cohen said.
Yesterday's press conference was timed to coincide with consideration by Congress of legislation that would hold national hospital rate increases to 9 percent a year.
"We compute what we think costs should rise, inflation, professional salaries, costs for pharmaceutical supplies for every hospital," said Graham Atkinson, mathematician for the commission.
In contrast with this individualized approach, he said, "the national bill would force every hospital to meet 9 percent standard, which would not be flexible enough."
If a woman gave birth to a child at a Baltimore hospital or a hospital in Washington's Maryland suburbs, it would cost her $1,200 on the average. This is below the cost for a New York state woman but above a woman in Colorado would pay.
The seven-member commission appointed by the governor, is required by law to make an annual report to the Maryland legislature, which established the commission in 1971. Three years later, the legislature authorized the commission to regulate all hospital rates for all types of care.
"Hospitals had never really been under the scrutiny of a commission before," said Cohen. "What we discovered was that the scrutiny actually benefited the hospitals with increases in profits and the patients with a decrease in patient-care costs."
The commission's figures released yesterday are for inpatient hospital care. The commission said it does not yet have figures showing whether the cost of outpatient care increased or decreased.
At least six other states have agencies that regulate some hospital rates.