Study: Different Hospital Prices Drive One-Third of Healthcare Spending Variation

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Although a patient's health status and utilization of health services is a large part of regional variation in healthcare spending, differences in hospital prices also play a role, according to a study from the Center for Studying Health System Change.

The study looked at claims data for 218,000 active and retired non-elderly unionized autoworkers and their dependents in 2009. The study looked at this particular population because unionized autoworkers' health plans are mostly universal across the country.

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Healthcare spending ranged from a low of $4,500 per person in Buffalo, N.Y., in 2009 to a high of $9,000 in Lake County, Ill. Differences in the number of services utilized accounted for two-thirds of the overall variation, while differences in hospital prices accounted for one-third.

For example, the average price for inpatient hospital care paid by the autoworker plan was 55 percent higher than what Medicare would pay. The lowest-price areas (St. Louis and Syracuse, N.Y.) were 30 percent higher than Medicare, while the highest-price areas (Lake County) were roughly 250 percent higher than Medicare.

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