Hospital price increases have been blamed for much of rise in health spending. Somewhat dated research in the journal Health Management, Policy and Innovation examines hospital price increases from 2000 to 2007 in Texas to determine what appears to have caused those increases. (HMPI Article) Looking at 319 hospitals, over the study period payments for non-public program patients were well-above costs and prices grew 53% during this time compared to only a 38.4% growth in costs. Public program costs, on the other hand, increased much faster than payments. The authors constructed regression models to attempt to identify likely causes of the price increases for private patients. The authors found little correlation between decreases in Medicare or Medicaid reimbursement were associated with private insurance payment growth. Similarly no significant relationship was found between uninsured or self-pay patient payments and private health plan payments. The strongest factor appeared to be increases in the cost of caring for private pay patients. No strong association was found with hospital mergers or concentration or with HMO penetration, although the authors don’t appear to have a sophisticated understanding of various types of health plans. The authors note an inconsistency with the notion that the costs of care is the primary driver of private payment growth and the increase in profitability of hospitals over the study period. The reason is likely that the authors have the relationship backwards–as hospitals are able to demand higher reimbursement from private payers, they spend some of that increased revenue on care–more technology, fancier buildings, higher salaries for administrators, etc.
✅ Subscribe via Email
About this Blog
The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry. Mr. Roche is available to assist health care companies through consulting arrangements through Roche Consulting, LLC and may be reached at [email protected].
Healthy Skeptic Podcast
This is an outstanding report on total global drug spending and trends, with projections out to 2025. It helps you understand this important area of health care, which does much...
June 1, 2021
MedPAC 2019 Report to Congress
June 18, 2019
It may be investors that need the redesign. They just keep pouring money into this digital health crap despite all the losses. Redesign Health claims that it makes money by...
September 16, 2022
In truth, this seems like more money down a rathole. Google’s parent and other investors are putting a billion dollars into Google’s health arm, Verily. Apparently want to compete with...
September 12, 2022
It is like investors have learned nothing from the past two years. Even supposedly smart investors like Morgan Health, which is making a $20 million contribution to LetsGetChecked, which supposedly...
September 12, 2022
Access ACO Care Management Chronic Disease Comparative Effectiveness Consumer Directed Health Consumers Devices Disease Management Drugs EHRs Elder Care End-of-Life Care FDA Financings Genomics Government Health Care Costs Health Care Quality Health Care Reform Health Insurance Health Insurance Exchange HIT HomeCare Hospital Hospital Readmissions Legislation M&A Malpractice Meaningful Use Medicaid Medical Care Medicare Medicare Advantage Mobile Pay For Performance Pharmaceutical Physicians Providers Regulation Repealing Reform Telehealth Telemedicine Wellness and Prevention Workplace