More Evidence of the Association between Hospital Market Concentration and Higher Prices and Profits

NIHCM Expert Voices in Health Care Policy

By James C. Robinson, PhD

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In this essay, Dr. James Robinson presents results from his latest work showing that the prices hospitals charge to private insurers for 6 common procedures are 30 to 50 percent higher when the hospital is located in a market where it faces less competition from other hospitals.

These findings add to the already substantial body of research showing that consolidation in hospital markets confers market power that enables hospitals to secure higher prices.

When seen in the context of current policies encouraging additional provider consolidation through accountable care organizations [ACOs], this work serves as an important reminder that ongoing vigilance of the potential anti-competitive effects of these new delivery systems is needed along with other measures to counteract growing market power of providers.

About the Author:

James C. Robinson, PhD is the Leonard D. Schaeffer Professor of Health Economics and Director, Berkeley Centerfor Health Technology, University of California, at Berkeley.


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2 Responses

  1. Hospital Prices

    Public access to hospital price data and charges pulls back the curtain on one of the most troubling characteristics of the American health care system:

    Medical providers set their prices in ways that seem arbitrary, with little oversight and practically no market incentive to reduce them, because almost no one actually pays the official rates.



  2. Healthcare Prices Rise Slowly, Employment Growth Remains Volatile

    According to the Altarum Institute’s Center for Sustainable Healthcare Spending, the rate of increase for personal healthcare prices and employment have fallen, on a national basis, for the months of June and July 2014.

    In June 2014, national personal healthcare prices increased at a year-over-year rate of 1.7%, slightly lower than the year-over-year rate for May 2014 (1.8%). In July 2014, national private sector healthcare employment increased by 7,000 positions, a monthly increase that was significantly lower than the average increase over the past 24 months of 18,600 positions per month.

    The data may signify potential increases in healthcare utilization caused by the expansion of insurance coverage through the Patient Protection and Affordable Care Act, although factors such as uneven job growth throughout the second quarter of 2014, and uncertain levels of health literacy among the newly insured population, may limit those increases.

    Click to access PRICES.pdf

    Robert James Cimasi MHA AVA CMP


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