As epidemic grows, the cost of drug addiction weighs on hospital finances

October 12, 2015   Chris Gates

Originally published at


Dealing with patients suffering from drug overdoses is an old problem for hospitals. But as healthcare providers and government and private insurers put more emphasis on controlling costs, today the problem has a new urgency.
The Centers for Disease Control and Prevention has officially classified prescription drug abuse as an epidemic. It affects everyone from teenagers who believe the oxycodone in the medicine chest is safer to use than illegal drugs to senior citizens who forget they’ve already taken their pain pill and swallow another in short order.

“We are seeing more unintentional drug overdoses from prescription drugs and their misuse,” said Liz Stallings, director of the clinical operations division of HFS Consultants, which specializes in behavioral health. That’s coupled with a rise in heroin addiction, as patients turn to that drug as an alternate source for a fix when doctors stop prescribing the opioid pain medications to which they’ve become addicted. Heroin use can increase the risks of an overdose for prescription drug abusers because many of these people likely have no idea how to manage street drug dosages, she said.

Hospitals bear the costs of all this in a number of ways, starting with having to treat a fast-growing population. A study conducted by the Stanford University School of Medicine last year analyzing 2010 data from hospitals nationwide found that prescription painkillers were involved in nearly 68 percent of opioid-related overdoses treated in emergency departments; heroin accounted for 16.1 percent of overdoses. About half of the patients in the study sample who went to the emergency room for opioid overdoses were admitted to the hospital and costs for both inpatient and emergency care totaled nearly $2.3 billion, it revealed.

Hospitals don’t necessarily receive full compensation for ED/post-ED overdose treatment. With the Accountable Care Act and expanded Medicaid programs in some states, “more people are insured but they may be underinsured in terms of what hospitals need to recover their costs,” Stallings said. “There are a huge amount of resources – medicine and labor – absorbed in responding to overdose patents.”

Jacob Levenson, CEO of substance abuse treatment industry data-services provider MAP Health Management, agreed that a significant number of people accessing ED care for overdoses “are coming from underinsured and/or indigent populations where there is almost zero subsidy rendered back to the provider,” he said. Not only that, but for many of them and their providers, it’s a recurring situation.

Finding answers

To help reign in the costs involved in treating overdose cases, Stallings points out that some communities are embracing new ways to avoid or lower the cost of these admissions in the first place. Pivotal to that is enabling first responders to treat overdose patients on the scene with drugs like the inhalant version of naloxone, which is marketed under the Narcan brand. That way, they will arrive at the hospital in a more stabilized condition instead of as a life threatening emergency.

Of course, that can present a problem too. In September, Narcan manufacturer Amphastar Pharmaceuticals said it would raise the price from around $20 a dose to more than $40, amid a spike in demand. Some regions, like the state of Connecticut, have fought that price hike.

Still, other initiatives are underway to bring other parties into efforts to treat overdoses at the site of these occurrence. For example, at Carolinas HealthCare Systems, a 39-hospital system with more than 7,500 licensed beds in North Carolina, South Carolina and Georgia, a pilot program is underway in partnership with Walgreens to dispense naloxone for the treatment of overdoses via standing order to any patient who needs it.

“We can educate those leaving the ED following an overdose, and their families and friends so that they are aware of naloxone’s ready availability and the value of having it in the environment for someone associated with abusing opiates,” said Stephen Wyatt, a doctor who specializes in psychiatry and addiction psychiatry who is leading the pilot.

That said, patients treated with naloxone before they get to the ED still will need significant ongoing attention once they arrive there, including monitoring and potential administration of other medications or treatment to deal with other problems associated with their overdose.

“Naloxone is fairly short-acting. Having first responders give it to a patient means they get to the ER alive, but within an hour of its being administered a patient could fall into another overdose state,” said Wyatt.

Hospitals on their own can’t make big inroads in reducing the costs around treating overdose patients until coordinated care and referral systems that help to cut overdose incidents become the norm in the healthcare sector, said Mary Ward, assistant vice president of behavioral health services for Carolinas HealthCare.

“We must follow up with patients with additional services to help them find a path of recovery, whether that is medication-assisted therapy or abstinence-based programs based on their individual needs,” she said.

It’s still very early stages on this front, however, with Stallings pointing out that in California, for instance, where HFS does most of its work, the expanded Medicaid program – dubbed Covered California – now offers benefits for drug detox and outpatient drug services. But “there are no contracts with providers to offer these services, so it’s a benefit they can’t get yet,” she said.

A shortage in such services, however, may be an opportunity for hospitals to offer more of these themselves.

“All hospitals should choose to treat addiction inside their systems [beyond the ED stage], since they already have addicted people accessing their services,” said Levenson. MAP Health Management, which just launched the MAP Recovery Network, provides data services that can be used to help hospitals align patients whose disease of addiction presents in particular ways with treatment providers in its network that have demonstrated efficacy in dealing with that type of patient. But hospitals also can leverage its data to decide whether there are opportunities to expand their services to support the types of substance abuses that are more widespread among their populations.

“There are a lot of ways for hospitals to enter into the addiction-treatment business, and with guidance and information to better identify the addict population within the existing patient demographic that can be a reality,” he said. There are, he adds, many nonprofit and state-funded opportunities MAP has identified that hospitals can use to treat underinsured people, so that they don’t lose money in the process of becoming an addiction-treatment provider.

“We can help that seamlessly happen without financial hemorrhage,” Levenson said.

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