Hospitals agree to cut spending

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By Jennifer Haberkorn

The nation's hospitals Wednesday became the latest industry group to promise voluntary cost cuts on the road to health care reform.

The American Hospital Association, the Community Health Systems, the Catholic Health Association and the Federation of Americans Hospitals have agreed to cut costs by $155 billion over the next decade, Vice President Joseph R. Biden announced at the White House Wednesday morning.

"Our hospitals are cracking under the weight of providing quality health care," Mr. Biden said. "The status quo is simply unacceptable."

Hospitals are just the latest constituency to volunteer to cut costs as the Obama administration's push for health care reform threatens to impose new regulations that could hurt business. Drug makers and a collection of health industry groups as a whole made similar pledges previously.

The deal was struck between the industry groups, the White House and Senate Finance Committee Chairman Max Baucus, Montana Democrat, whose committee has yet to release its own reform blueprint.

Mr. Biden said the savings will come from delivery system reforms, including electronic record-keeping, and reductions in Medicare and Medicaid payments to the facilities. The administration argues that hospitals will save money if more individuals are insured.

"We as hospitals must use our knowledge of the health care system to make it beter for everyone," said Sister Carol Keehan, chief executive officer of the Catholic Health Association.