Hospital Size, Market Share Affect Inpatient Care Prices

Posted on Fri, Mar 07, 2014
Hospital Size, Market Share Affect Inpatient Care Prices

Higher-price hospitals generally score well on reputational indicators

FRIDAY, Feb. 28, 2014 (HealthDay News) -- Size and market share are the greatest differentiators between hospitals receiving low prices and high prices for inpatient care, according to a study published in the February issue of Health Affairs.

Chapin White, Ph.D., from the RAND Corporation in Arlington, Va., and colleagues used private insurance claims data to identify hospitals receiving inpatient prices significantly higher or lower than the median in their market.

The researchers found that hospitals receiving higher prices tended to be larger; be major teaching hospitals; belong to systems with large market shares; and provide specialized services, such as heart transplants and Level I trauma care. Significant revenues were received by high-price hospitals from non-patient sources, including state Medicaid disproportionate-share hospital funds. High-price hospitals enjoyed healthy total financial margins. High-price hospitals received mixed scores for quality indicators, doing much better than low-price hospitals on reputation-based indicators, like the U.S. News & World Report rankings, while generally scoring worse on objective measures of quality, such as postsurgical mortality rates.

"Insurers may face resistance if they attempt to steer patients away from high-price hospitals because these facilities have good reputations and offer specialized services that may be unique in their markets," the authors write.

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