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South Florida Business Journal (Broward Edition - September 17, 2002)

Study: Hospitalizations cost Medicare

One third of all elder Floridians, lacking drug coverage and unaware of special prescription drug programs, are endangering their health by delaying vital medical treatments, according to a statewide study by the Florida State University Center for Economic Forecasting and Analysis.

The study, conducted by Tim Lynch, director of the center, looked at Medicare costs in Florida, Arizona, Arkansas, Georgia, North Carolina and Texas resulting from hospital stays for the treatment of depression, diabetes and osteoporosis. The study, sponsored by Indianapolis, Ind.-based drug company Eli Lilly and Co. (NYSE: LLY), found more than 45,000 Medicare recipients were hospitalized an average of 8.2 days for the illnesses at a cost of nearly $298 million. At an average cost of $15,930 a hospital stay, the drug-company-sponsored study suggests hospitalization is more expensive than treating the illnesses with medication.

For depression, the study said Medicare paid $90 million for acute care hospital treatment for the 13,510 seniors studied. Since the study said 70 percent of depressed patients respond to medication therapy, it figured the potential Medicare savings with drug therapy at $49.5 million. In Florida, Medicare spending for the 4,851 clinically depressed seniors studied totaled $30.6 million, for potential savings of $ 16.5 million, according to the study.

For diabetes, Medicare paid $197 million for the more than 30,000 seniors included in the study. Assuming half the hospitalizations could be prevented with early detection, intervention and treatment with prescription drugs, the study put potential annual savings at $49.2 million. In Florida, the study said Medicare spent $49.9 million for 7,948 seniors, for potential savings of $12.5 million.

For osteoporosis, the study said Medicare paid $11.3 million to hospitalize 1,386 seniors. If the 767 cases categorized as "minor" or "moderate" had been treated early with effective prescription medication, the study said Medicare could have saved $4.1 million. In Florida, Medicare spending for 397 seniors was $3.4 million, of which the study estimated $1 million could have been saved by prescribing drugs, not hospital stays.

Citing as the reason seniors chose hospitalization over drugs, the study said statistics showing older people in the United States may forego medication because they can't afford to fill a prescription. As a result, the study said, seniors may put off seeking care until their conditions become critical or life-threatening.

Eli Lilly has argued a prescription drug benefit for Medicare recipients needed to alleviate this problem. In April, the company created its LillyAnswers program. The program offers eligible seniors any Eli Lilly retail drug for $12 a month per prescription.

To date, the company said more than 9,500 Floridians signed up for the program.

Eli Lilly said it is working with legislators, state agencies and senior groups to reach eligible, unenrolled seniors.

"While Congress is working out the details for providing all seniors with prescription drug coverage, we wanted to help the seniors who are most in need access the medications that treat some of the most common and serious ailments of aging," said Gail Cordial, manager of public affairs for Eli Lilly. "As this study shows, the costs of delaying treatment - in dollars and human suffering, are significant."