Less Time in Hospitals Not a Panacea : Medicine: Despite fewer and shorter hospital stays, the average California family still spends more on health than the national average.

Californians are admitted to hospitals less often than other Americans. When admitted, state residents are also released faster--spending an average of 6.1 days per hospital stay, a full day less than the national average.

These statistics, in part, reflect a younger and perhaps healthier population, health care experts say. But they are also due in large measure to the significant market share in California of health maintenance organizations, whose “managed care” tactics tend to limit hospitalization to save on costs.

Yet Californians still spend more per hospital visit and, overall, families spend more per year on health care than the national average.

The reasons why provide a cautionary tale for the the Clinton Administration as it tries to expand health care coverage to all Americans while containing costs. Health care is so complex, with a myriad of factors contributing to costs, health care experts say, that trying to reduce savings in one area does not reduce overall cost. In many cases, costs are just shifted, experts say.

Hospital care is no doubt the most expensive element of health care--accounting for 43 cents of each health dollar spent, according to state health officials. That is why aggressively monitoring hospital use has been much of the focus of the HMOs that provide care for about 31% of Californians.

According to the California Assn. of Hospitals and Health Systems, California’s hospital admission rate is 103 per 1,000 population, compared to 126 per 1,000 for the nation as a whole. But the average California family spent $4,433 for health care in 1991, 3% more than U.S. families overall, according to a study by Families USA, a nonprofit consumer health reform organization in Washington.

Cost are higher in California for several reasons, including the cost of living, the large number of medical facilities that are dispersed throughout the state and the vast pool of doctors and medical entrepreneurs providing outpatient services, according to health care analysts.

“We have a lot of duplication of high-cost facilities--open heart surgery facilities, magnetic resonance imaging units--that are dispersed throughout California as opposed to having them centralized the way they are in Canada, which would cut down on administrative costs,” said Stanford University health care economist Victor Fuchs, who studied hospital admission and length of stay statistics for an article in the New England Journal of Medicine. In the article, Fuchs and co-author Dr. Donald A. Redelmeier, a professor at the Toronto School of Medicine, studied factors in California and the Canadian province of Ontario to compare differences in health care costs in the United States and Canada.

“The cost of living is higher here and so is the cost of human resources. Nurses are paid a lot in California, for example, relative to other states,” said Alain C. Enthoven, a Stanford University business school professor.

“California’s an attractive place to live, so doctors move here, and the seven major medical schools are turning out doctors who want to stay here. So there is a lot of doctoring being done by a lot of doctors, and that’s expensive. Supply has a way of creating its own demand, “ he said.

Enthoven is among proponents of the “managed competition” health care concept embraced by the Clinton Administration. Under managed competition, health care consumers would be organized into large purchasing groups that would bargain with health care plans on prices for a standard set of health care benefits.

The theory is that health care plans would have to compete on price and quality and thus would be forced to cut waste. Also, in theory, managed competition would eliminate excess supply as the least-efficient and effective providers would be winnowed out.

California’s success at limiting unnecessary hospitalization is seen by health care analysts and consumer advocates as a positive step in health care reform, but also as only a piece of the puzzle.

“There has been a dramatic decline in length of stay, and that’s a positive development,” said Geraldine Dallek, executive director of Medicare Advocacy Project in Los Angeles and a former RAND researcher. Even if patients haven’t completely recovered, early discharge may be better, she said. “Hospitals are not a good place to be. We think (patients) are better off being at home.”

Dallek does not claim that less hospitalization significantly reduces health care expenses, because some costly high technology care that formerly would have been restricted to a hospital settings is now being administered to patients in clinics or at home.

“We do things in the home that we never did before,” she said.

Additionally, said Arleen Leibowitz, senior economist at RAND Corp. in Santa Monica, the cost savings is not proportionate to each day less in the hospital. “The first day a patient spends in a hospital is a lot more expensive than the fifth day. The intensity of care trails off because hopefully you are recovering. So when you are in hospital for a lesser period of time, you are cutting off less-expensive days,” Leibowitz said.

The Clinton Administration is taking a close look at California’s performance and those of other states as it fashions its nationwide health care reform plan, said Robert Boorstin, a spokesman for Hillary Rodham Clinton’s health care task force.

“We are looking at what’s best in every state program and state model,” Boorstin said. “Shorter hospitalizations are a better thing for all concerned. But on the other hand, we’re trying to get costs under control, and the way to do that is not always to bring down the number of (hospital) stays but rather to improve preventive care.”

Hospital Stays Sick Californians spend less time in hospitals than the national average, thanks largely to the managed care methods of the health maintenance organizations that have a large share of the state’s health insurance market.

Average length of hospital stay in 1991: U.S. average: 7.2 days California: 6 days But Californians spend more per hospital admission And Californians spend more per household on health care than the national average (1991 figures):U.S. average: $4,433 California: $4,296 Source: American Hospital Assn., Families USA