News in brief - June 19, 2006

Survey: Health cost increases slow - Study reveals gap between hospital tax breaks and charity care - Philadelphia practices report 4% staff pay increase

Survey: Health cost increases slow

Health care costs are increasing more slowly, though the growth is still expected to reach double digits this year, according to a survey conducted by Aon Consulting, a division of Chicago-based Aon Corp.

Projected increases for HMOs, PPOs, and point-of-service plans are expected to be slightly lower than last year, according to a survey of more than 70 health plans. Costs for HMOs, for example, are expected to increase 12.4% this year, compared with a 13.2% increase last year.

Prescription drug costs also are not expected to increase as much this year as in prior years. General pharmacy costs are projected to increase 12.2% this year, compared with 13.1% last year, according to the survey.

Study reveals gap between hospital tax breaks and charity care

A study of 21 nonprofit hospitals in the Chicago area found that the hospitals only spend $1 on charity care for every $3 they receive in tax breaks.

The study, released May 30 by the Chicago-based Center for Tax and Budget Accountability, concluded that the hospitals receive $325.6 million in annual tax exemptions and spend $105.2 million on charity care.

In a written statement, the Illinois Hospital Assn. and Metropolitan Chicago Healthcare Council questioned the findings, saying that the aggregate value of the hospitals' community benefits amounts to $1.6 billion.

The hospital groups said the data were incomplete and the methodology was flawed, and the report was "politically motivated and bought and paid for by the Service Employees International Union, which is engaged in a campaign to discredit hospitals as it tries to organize workers."

The center acknowledged its report was paid for by the SEIU, and that the union has a representative on its board, but said its findings were independent.

Philadelphia practices report 4% staff pay increase

Salary increases for administrative and staff positions averaged 4% last year for physician practices in the Philadelphia area, according to a survey conducted by Margolis & Company P.C., a regional accounting and consulting firm based in Bala Cynwyd, Pa.

The increase last year was greater than the 3% increase practices saw in 2004. Practices said raises were largely based on performance (87%), cost of living (74%) and an employee's tenure (46%), according to the survey.

Nearly 60% of responding groups said they offered a bonus program to employees, while 65% of those offering a bonus said all employees were eligible to participate, according to the survey.

The survey is based on responses from about 60 practices in a nine-county area surrounding Philadelphia. The responding groups cover more than 15 different specialties.