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Growth in hospital prices outpaces that of physicians by nearly 20 percent, Health Affairs shows

Consolidation is a factor in the price growth on the facility side, with prices for hospital-based procedures increasing 43 percent in seven years.

Jeff Lagasse, Associate Editor

Physician prices have seen a growth trend over the past several years, but between 2007 and 2014, hospital prices outpaced them, according to new research published in Health Affairs.

Hospital-based procedures have seen growth driven largely be the facility side of the equation, with prices for inpatient services ballooning by 43 percent over that time. Physician prices, meanwhile, grew by 18 percent.

Prices for outpatient services grew 25 percent in the same window. Physician prices on the outpatient end? Just 6 percent.


Four hospital-based procedures -- including knee replacement and cesarean section -- saw the hospital portion of the total price eat up between 64 and 84 percent of the total cost, the study found.

The underlying reason for the discrepancy isn't currently known, but the authors still passed on some recommendations to lawmakers, urging them to consider legislation that would reduce hospital price growth.

Some means of doing so, they said, include a more rigorous enforcement of antitrust statutes regarding mergers and acquisitions. The idea is that consolidation is one of the primary factors contributing to price growth on the facility side, with prices typically increasing after mergers.

During the study period, the average facility fee was about $14,000. The average physician fee, by contrast, was about $4,000. Hospitals accounted for about 70 percent of the price growth.


On Tuesday, the American Hospital Association disputed the Health Affairs report's findings, claiming the conclusions were too broad. One of the sticking points for the AHA is that the research uses data from employer-sponsored plans -- and leaves out claims from Medicare, Medicaid and Blue Cross Blue Shield.

The AHA also contended that hospitals incur expenses that doctors don't, including regulatory compliance and administrative expenses.


Prices and spending in healthcare are growing steadily, but at a moderate pace, according to an October report from the Altarum Center for Value in Health Care.

The first half of 2018 saw just 1.9 percent growth, due partly to price increases of only 2 percent in the second quarter. And you have to go pretty far back to find quarterly price growth above 2 percent -- the last time it happened was in 2012.

Still, growth has been steady, and the country's healthcare spending habits are at a level nearly double that of similar countries. Spending per capita in the U.S. is more than $9,000, compared to just over $5,000 in other Western nations.

Twitter: @JELagasse

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