Abstract
Health care spending continues to rise, and opportunities to decrease costs without negatively impacting patient care are a priority. Addressing administrative spending, approximately 25% of US health care spending, is an opportunity. To identify savings, hospitals and policymakers need data to quantify administrative expense categories and establish benchmarks for comparisons. However, it is unknown whether the Medicare Cost Reports-the only universal, public source for US hospital financials-accurately capture administrative expenses. We found that, at the national level, administrative expenses for 5639 hospitals were $166.1 billion, or 17.0% of total hospital expenses. A total of 4417 (78.3%) hospitals reported only a single overall "administrative and general" expense, averaging 18.9% (SD: 5.8%) of total hospital expenses, while 1222 (21.7%) provided detailed data on administrative expenses averaging 17.1% (SD: 5.0%) in sum. For those reporting subcategories, "other administrative and general" represented $37.6 billion (66.1%). Of the 3971 subcategories reported, 31.2% appeared mislabeled. In summary, hospitals report widely variable administrative expenses (7.0 percentage points between the 25th and 75th percentile), with few detailed, and often mislabeled, data to guide the identification of savings opportunities. As structured today, the Medicare Cost Reports are not a consistent, reliable, or actionable dataset to aid hospitals or policymakers in quantifying and addressing excess administrative spending.