Feels like beating a dead horse to keep summarizing research on hospital pricing, but it is an important issue and if you are at all in the business of trying to manage health costs, hard to do that without addressing hospital costs. A study in Health Affairs finds that hospital inpatient prices are growing faster than hospital-based physician services prices. (HA Study) The researchers looked at price growth for the period 2007 to 2014 from large private insurers in the categories of inpatient services, hospital-based outpatient care, and four procedures, C-section, vaginal delivery, outpatient colonoscopy, and knee replacement. They performed some adjustments to ensure that case-mix was not unduly affecting results and controlled for inflation. The actual paid amounts were used in determining prices, not what the hospital list price might be. For the four specific procedures, hospital inpatient costs are the primary component of total expense, ranging from 61% for vaginal deliveries to 84% for knee replacements. Over the study period, hospital inpatient prices rose 42% and outpatient prices rose 25%; while the corresponding physician prices for the services increased by only 18% for inpatient services and 6% for hospital-based outpatient care. Hospital prices therefore played an outsized role in total growth in the price of a procedure, for example, growth in hospital prices accounted for 77% of the total cost growth for a colonoscopy and 97% of total price rise for knee replacement. The authors also looked at whether relative bargaining power between hospitals and insurers, as measured by concentration levels, appeared to affect the results. While hospital facility prices were the dominant cause of overall cost growth everywhere, they were an even greater factor where hospitals had more bargaining leverage than health plans. Just one more piece of evidence that controlling health spending growth will mean doing something serious about hospital pricing, and frankly about hospital cost structures, including executive compensation and the practice of building Taj Mahal facilities.
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
Subscribe to Blog via Email
As is usually the case in health care, the big just keep getting bigger. UnitedHealth Group’s Optum division is buying NaviHealth, which helps manage post-acute care for Medicare Advantage members.
May 20, 2020
Stellar Health shines as it raises $10 million in new financing for its business of aiding providers and payers in doing value-based care.
May 14, 2020
Another typical post. For new readers, this blog usually is all health care business, policy, and research and one staple is me making fun of the ridiculous names people put...
May 7, 2020
MedPAC 2019 Report to Congress
June 18, 2019