What is clear is that hospital stays used to be a lot longer. In 1980, the average in the United States was 7.3 days. Today it’s closer to 4.5. The difference isn’t because hospitalized patients are becoming younger and healthier; by and large, today’s patients are older and sicker. Yet they’re being discharged earlier.
One big reason for the change came in the early 1980s. Medicare stopped paying hospitals whatever they claimed their costs were and phased in a payment system that paid them a predetermined rate tied to each patient’s diagnosis. This “prospective payment system,” as it is called, shifted the financial risk of patients’ hospitalization from Medicare to the hospital, encouraging the institutions to economize.
.. The prospective payment system pays a hospital the same amount whether a Medicare patient stays five days or four. But that extra day adds costs that hit the hospital’s bottom line.
.. A physician who practices at a Boston-area teaching hospital told me that hospital administrators exert social pressure on doctors by informing them that their patients’ stays are longer than that of their peers.