Three years ago the average patient at Georgetown University Hospital stayed 10 days. Now he stays fewer than eight.
"We looked at the length of stay by doctor for each type of diagnosis and we showed our doctors the results," said Charles O'Brien, the hospital administrator. Some doctors were keeping patients significantly longer for the same illness than their colleagues did.
Many of them reexamined their methods of treating patients and cut back the length of hospitalization, he said.
Georgetown also began encouraging more use of so-called walk-in surgery, outpatient treatments and the shifting of patients to nursing homes as soon as medically indicated, O'Brien said.
Actions such as these, together with a sharp drop in the overall national inflation rate in the past three years, have led to a substantial slowdown in medical inflation. In 1980 and 1981 national health spending went up 15 percent each year. In 1984, the increase was 8.1 percent. Related story on Page 7 of Health section.
These reductions explain why Blue Cross-Blue Shield, the nation's largest health insurer, was able to offer the government and 1.5 million of its employes a $754 million refund of health insurance premiums this week.
"Premium rates are set each year in anticipation of cost and utilization trends, but they are, as any actuary will tell you, only educated guesses," said Bernard Tresnowski, president of the Blue Cross and Blue Shield Association, which covers 80 million Americans.
Blue Cross-Blue Shield collected $2.5 billion in premiums for government employes last year and estimated premiums at $2.4 billion this year to cover the same workers.
"The estimates upon which this year's premium rates were based did not anticipate the decline in hospital admissions among our subscribers. Nor did they predict the shorter stays for those who were admitted to the hospital," Tresnowski said.
In 1983, government employes and members of their families insured by Blue Cross-Blue Shield nationwide were admitted to the hospital 515,980 times. In 1984 the figure dropped to 436,500. The government's Blue Cross policyholders were hospitalized a total of 3,993,970 days in 1983. This figure dropped over a fifth to 3,059,850 last year. Average lengths of stay also dropped about 9 percent.
The annual increase in Blue Cross-Blue Shield costs for government employes, which had run as high as 18 percent in 1981 and 10.6 percent in 1983, dropped to 2 percent in 1984.
These trends are paralleled in health care all over the country.
The American Hospital Association reported recently that, in 1984, 1.5 million fewer patients were admitted to hospitals than in 1983, the average length of stay nationally dropped to 6.7 days per patient from 7 in 1983, and overall hospital costs rose only 4.5 percent, the lowest rate since 1963.
This remarkable drop in health costs follows a period of national hysteria about double-digit health inflation.
One obvious factor, health economists say, is the fall in the basic national inflation rate. About 60 percent of all health-cost inflation is believed to be simply a product of general inflation in the economy, and that has come down sharply in recent years.
Another major factor is a new cost-consciousness by financially hard-pressed federal, state and local governments, which paid $125 billion of the nation's medical bills in 1983.
Employers are also concerned. They pay about $90 billion a year for health insurance for their employes.
Instead of simply continuing to pay medical bills, all these sources are beginning to pressure hospitals and doctors to hold down costs.
The biggest innovation is the government's new prospective-payment system for Medicare. Instead of paying hospitals for each day of care and each individual test, Medicare sets a fixed per-case payment for each of nearly 500 different types of illness.There is no financial incentive to add days or tests, because the hospital gets no more if the patient stays three days or five. In fact, the incentive is to send them home or to less-costly care fast.
Many believe that once a doctor and hospital begin thinking about how to hold down costs for Medicare patients, the new habits carry over to their non-Medicare patients and exert some cost-control influence there too.
However, some economists fear that the recent lessening of medical inflation may not last long. They say it is largely the product of the overall downturn in the underlying Consumer Price Index, a thinning of hospital staff -- and therefore costs -- during the recession, and lingering economic problems in some regions, which often cause downturns in medical outlays.