Inpatient Hospital Prices

Health plans don’t like being beaten up over premium increases, so they have tended to shift the blame, generally correctly so, to providers for utilization and unit price increases.  The American Journal of Managed Care carries another piece of research aimed at discerning trends in hospital pricing over the last few years.   (AJMC Research)   The researchers used a database for 45 to 50 million people, under age 65, with commercial group health insurance and examined the actual total payments from the insurer and the covered person for inpatient hospitalizations for 350 admission categories.  On an unadjusted basis, for the years 2008 through 2010, prices per admission grew 8.2% per year.  The intensity of health care services does change constantly, usually in a justifiable fashion, so the authors adjusted for intensity, and with those adjustments, prices grew around 6.8% per year.  Either number is far above general inflation during this period or growth in per capita GDP.  Prices for many of the most common admission diagnoses grew in a variable pattern, but almost all were well above inflation and GDP growth.  While rural areas had price growth close to the national average, major metropolitan areas showed more variation, with Houston showing slow price growth, for example, while in the same state, Dallas and San Antonio had much more rapid increases.  The research supports our long-time belief that unit prices, particularly hospital inpatient and outpatient prices, are a much more important factor in health care spending growth than utilization changes.