Study: Inpatient Hospital Prices Drive Spending Differences

Inpatient hospital stay pricing drives almost all of the spending variation among hospitals for episodes of care for privately insured patients, according to a study by researchers at the National Institute for Health Care Reform.

The researchers analyzed claims data from 2011 for 590,000 active and retired nonelderly autoworkers and dependents. The study focused on the cost of uncomplicated knee and hip replacements and found spending per episode of care varied more than twofold across the 36 hospitals examined, from $17,000 to more than $35,000. Differences in the prices of initial hospital stays accounted for more than 80 percent of the variation in overall episode spending, according to the study.

Overall, the researchers concluded some hospitals command much higher inpatient prices than other hospitals. These high-price providers tend to have specialized service lines other nearby hospitals don't have, are part of larger health systems with significant bargaining clout, have unusually good reputations and are more likely to be large teaching hospitals. If payers exclude high-price hospitals from their provider networks, they risk leaving enrollees without in-network access to needed services, according to the study.

moneyThese findings echo a study published in Health Affairs last month. That study found high-price hospitals enjoy better reputations than their low-price counterparts but don't necessarily perform the best on outcome-based quality measures. However, high-price hospitals' dominant market positions, large size and membership in even larger systems make it hard for payers to negotiate lower prices, according to the study.

More Articles on Hospital Prices:
Massachusetts: Partners, South Shore Merger Would Up Costs, Hurt Competition  
California Healthcare Workers Seek to Limit Hospital Pricing
Study: High-Price Doesn't Mean High-Quality for Hospitals 

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