Understanding differences between high- and low-price hospitals: Implications for efforts to rein in costs Academic Article uri icon

Overview

MeSH Major

  • Financial Management, Hospital
  • Health Expenditures
  • Hospital Costs
  • Quality Indicators, Health Care

abstract

  • Private insurers pay widely varying prices for inpatient care across hospitals. Previous research indicates that certain hospitals use market clout to obtain higher payment rates, but there have been few in-depth examinations of the relationship between hospital characteristics and pricing power. This study used private insurance claims data to identify hospitals receiving inpatient prices significantly higher or lower than the median in their market. High-price hospitals, compared to other hospitals, tend 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. High-price hospitals also receive significant revenues from nonpatient sources, such as state Medicaid disproportionate-share hospital funds, and they enjoy healthy total financial margins. Quality indicators for high-price hospitals were mixed: High-price hospitals fared much better than low-price hospitals did in U.S. News & World Report rankings, which are largely based on reputation, while generally scoring worse on objective measures of quality, such as postsurgical mortality rates. Thus, 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.

publication date

  • February 2014

Research

keywords

  • Academic Article

Identity

Language

  • eng

Digital Object Identifier (DOI)

  • 10.1377/hlthaff.2013.0747

PubMed ID

  • 24476706

Additional Document Info

start page

  • 324

end page

  • 31

volume

  • 33

number

  • 2