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Get the Facts

Did You Know?

  • Michigan hospitals rank third in the nation for the lowest hospital prices relative to Medicare.
  • Prescription drugs are the fastest-growing hospital expense.
  • The most severe patients are staying in hospitals longer, with length of stay up 22% since 2019.
  • Michigan hospitals provide more than $200 million in financial assistance to patients each year.
  • The cost of supplies, drugs and labor has increased by more than 30% since 2019.
  • Many Michigan hospitals operate on margins of just 1% to 3%, reinvesting much of their revenue back into the community and patient care.

Frequently Asked Questions

Healthcare affordability is a growing concern for families, employers and communities across Michigan. Several factors are driving these pressures at the same time.

Hospitals are experiencing sharp increases in the cost of labor, medical supplies and prescription drugs. Prescription drugs are now the fastest-growing hospital expense, with some new treatments costing more than $300,000. At the same time, patients are arriving sicker and requiring more complex care, including longer hospital stays and more advanced treatments.

Workforce shortages and inflation have also driven up labor costs, which account for the largest share of hospital spending. In addition, policy changes and reductions in coverage can increase the number of uninsured patients, shifting costs across the system.

Healthcare affordability is not driven by one factor or one part of the system. It reflects pressures across the entire healthcare landscape.

Healthcare costs are influenced by a combination of factors, including:

  • Rising prescription drug prices.
  • Workforce shortages and labor costs.
  • More patients with chronic or complex conditions.
  • Increased demand for specialized care.
  • Administrative complexity across the system.

No single factor or organization is responsible. Affordability challenges reflect pressures across the entire healthcare system.

Insurance companies set premiums, not hospitals. Premium increases are influenced by a range of factors, including prescription drug costs, administrative expenses, high-cost claims and insurer pricing decisions. Hospitals are one part of the system, but they do not control what individuals and employers pay for coverage.

Michigan hospitals rank third in the nation for the lowest hospital prices relative to Medicare, a widely used national benchmark. That means hospitals in Michigan are paid less on average for the same services than hospitals in many other states, while continuing to provide high-quality care.

Hospitals are actively working to improve affordability while maintaining access to care. They are expanding access to lower-cost care settings such as outpatient services and telehealth, which is now widely available across Michigan. They are investing in care coordination and prevention to reduce avoidable hospital visits and complications.

Hospitals are also adopting payment models that focus on quality and outcomes, not just volume, and supporting efforts to improve transparency and reduce administrative waste across the system.

Prescription drugs are one of the fastest-growing drivers of healthcare costs. The median price of a new drug exceeds $300,000, more than four times the median U.S. household income. In addition, these costs increase by roughly 10% annually.

Hospitals are major purchasers of drugs, and rising pharmaceutical prices directly increase the cost of care. These costs affect patients, employers and hospitals alike and are a key factor in overall affordability challenges.

Hospitals invest in facilities and technology to ensure patients have access to safe, modern care close to home.

Many buildings and systems must be updated to meet current safety standards and support advanced treatments. These investments also expand access to services such as emergency care, cancer treatment and behavioral health.

Funding for these projects typically comes from a combination of philanthropy, grants and long-term financing, and hospital margins are generally modest and reinvested into patient care.

Yes. Hospitals provide care to all patients, regardless of their ability to pay.

Many offer financial assistance programs, payment plans and personalized support to help patients understand and manage healthcare costs. In Michigan, hospitals provide hundreds of millions of dollars each year in financial assistance and unpaid care. Collectively, Michigan hospitals provided $208 million in financial assistance and wrote off an additional $461 million in bad debt in fiscal year 2023.

Hospital spending reflects the cost of delivering care.

The largest share goes to labor, including doctors, nurses and other healthcare professionals. Other major cost areas include medical supplies, prescription drugs, facilities and equipment, and administrative functions such as claims processing and information technology.

This reflects the reality that healthcare is a people-driven, resource-intensive service.

Improving affordability requires action across the entire healthcare system.

That includes addressing prescription drug prices, reducing administrative complexity, improving transparency and expanding access to preventive care. It also requires collaboration between hospitals, insurers, employers, policymakers and others.

Michigan hospitals are committed to being part of that solution and working toward practical, sustainable improvements.

Hospital Facts

Fact: Multiple factors are contributing to rising healthcare costs.

Rising healthcare costs are frustrating for families and businesses alike, and hospitals understand that pressure. But the reality is more complex. Prescription drugs are now one of the fastest-growing costs in healthcare, with some new medications priced at more than $300,000. At the same time, more patients are living with serious or chronic conditions that require advanced, ongoing care.

Hospitals are on the front lines of these challenges every day. They do not set drug prices, and they do not control many of the biggest cost drivers.

Fact: Hospitals are actively working to control costs and improve affordability.

Hospitals know that every dollar matters to patients and families. That is why they are working to make care more efficient, more accessible and more affordable.

Across Michigan, hospitals are expanding access to lower-cost care options, such as outpatient services and telehealth, helping patients avoid unnecessary hospital stays and get care closer to home. They are also investing in prevention and early treatment, so small health issues do not become bigger, more expensive problems later.

These efforts may not always be visible, but they make a real difference in what patients experience and what they pay.

Fact: Most hospitals operate on thin margins and reinvest in patient care.

Most Michigan hospitals operate on very thin margins, often just 1% to 3%. Those resources remain in the system and are reinvested into patient care, staffing, equipment and community services.

Hospitals also provide a significant amount of care that is never paid for. In Michigan, that includes hundreds of millions of dollars each year in financial assistance and unpaid care.

For hospitals, the mission is to ensure care is available when people need it, regardless of their circumstances.

Fact: Michigan hospitals have some of the lowest prices in the nation.

Michigan hospitals actually have some of the lowest prices in the country. The state ranks third in the nation for the lowest hospital prices compared to Medicare.

That means hospitals here are doing more with less, while continuing to provide high-quality care and maintain access in communities across the state.

Fact: Delayed care is driving more complex and costly health needs.

People are delaying care due to insufficient health insurance coverage. That delay can turn manageable conditions into serious health issues that are more expensive and harder to treat.

With federal cuts to health insurance programs, hospitals are seeing more patients arrive sicker and needing more complex care than in the past. This is a sign of how difficult it has become for many people to access timely care, not overuse.

Fact: No single part of the healthcare system, including hospitals, controls healthcare costs. 

Healthcare is a system, and no single part controls the whole.

Hospitals, insurers, drug manufacturers, employers and policymakers all play a role in the cost of healthcare and what patients ultimately pay. Hospitals are often where these costs come together, but they do not control many of the factors that drive them.

That is why real solutions require everyone at the table.

Fact: Hospitals are taking concrete steps to make care more affordable and accessible.

Hospitals are working every day to make care more affordable and accessible, even when the challenges are significant.

Every hospital in Michigan now offers telehealth or partners with telehealth providers, making it easier for patients to get care without added time or travel. Hospitals are also shifting care to the most appropriate setting, investing in prevention and improving coordination to reduce unnecessary costs.

These efforts are focused on one goal: helping patients get the care they need without adding unnecessary financial burden.

Fact: There are real, achievable solutions to improve healthcare affordability.

Lowering prescription drug prices, reducing administrative waste, improving transparency and expanding access to preventive care can all make a meaningful difference. Hospitals are committed to working with partners across the system to move these solutions forward.

Because at the end of the day, healthcare is about people, families and communities, and making sure care is there when it matters most.