While policies to combat rising hospital prices often target highly concentrated hospital markets, a new analysis published in Health Affairs suggests that many pricey hospitals are actually inmarkets with a low concentration of hospitals.
For the study, researchers affiliated with Harvard Medical School in Boston and Harvard University in Cambridge, Mass., analyzed 2018 claims data from the Health Care Cost Institute. The researchers used data of 40 million commercially insured individuals and created an inpatient and outpatient price index for individual general acute care hospitals.
The researchers measured market concentration by determining a hospital's Herfindahl-Hirschman Index,a measure of market density used by the Federal Trade Commission to determine high-concentration hospital markets. The index was determined by analyzing admissions numbers reported in the 2017 American Hospital Association Annual Survey.
Five details:
1. More than quarter of all high-priced inpatient and outpatient hospitals were in unconcentrated markets, or those with an index below 1,500, the FTC’s cutoff score.
2. Just 17.4 percent of high-priced hospitals providing inpatient services were in the most concentrated markets, with an index score exceeding 4,000.
3. Additionally, 12.7 percent of high-priced hospitals providing outpatient services were in the most concentrated markets.
4. "To some degree, this result reflects the fact that more concentrated markets have fewer providers," the researchers wrote. "But it also reflects the reality that high-price providers were prevalent across the spectrum of market concentration."
5. The researchers said that price regulation efforts may be more effective if they focused on provider prices instead of market concentration.
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