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Hospital price increases for inpatient services will cost consumers and employers $250B over next decade

Between 2013 and 2017, hospital prices for inpatient services increased 19%, translating to about 4.5% per year.

Jeff Lagasse, Associate Editor

The annual cost of hospital inpatient services for privately insured individuals exceeded $200 billion in 2018 and is projected to exceed $350 billion in 2029, according to data compiled by UnitedHealth Group.

Hospital inpatient spending growth is influenced by several factors, including prices charged by hospital facilities, prices charged by physicians practicing within these hospitals and patients' utilization of inpatient services.


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Hospital prices were found to be the biggest driver of inpatient spending. Between 2013 and 2017, hospital prices for inpatient services increased 19%, translating to about 4.5% per year. Physician prices for inpatient services, meanwhile, increased 10%, or 2.5% per year.

The utilization of inpatient services delivered by physicians and hospitals each declined by 5 percent, the only category to show a decline.

Despite those figures, there's a savings opportunity for hospitals, the report found. If hospital price increases for all inpatient services were moderated by just two percentage points per year between 2020 and 2029, hospital inpatient spending for privately insured individuals would be reduced by over $50 billion in 2029 and $250 billion over the decade.

That's important to note, because while overall growth in hospital prices exceeded growth in physician prices by an annual average of two percentage points between 2013 and 2017, the differences were greater for many common types of hospital inpatient services.

The average annual increase in hospital prices for hypertension, for example, was 6.5%, while the corresponding physician price increase was 1%. For childbirth, the numbers were 6% and 2%, respectively; for C-section childbirth, 5.5% and 2%; for coronary bypass, 6% and 1.5%; and for appendectomy, 7.5% and 0%.


Physician prices have seen a growth trend over the past several years, but between 2007 and 2014, hospital prices outpaced them, according to research published this year 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% over that time. Physician prices, meanwhile, grew by 18%.

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

Twitter: @JELagasse

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