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Hospital prices grew substantially faster than physician prices for hospital-based care in 2007-14

Cooper, Zack, Craig, Stuart, Gaynor, Martin, Harish, Nir J, Krumholz, Harlan M and Van Reenen, John (2019) Hospital prices grew substantially faster than physician prices for hospital-based care in 2007-14. Health Affairs, 38 (2). 184 - 189. ISSN 0278-2715

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Identification Number: 10.1377/hlthaff.2018.05424

Abstract

Evidence suggests that growth in providers’ prices drives growth in health care spending on the privately insured. However, existing work has not systematically differentiated between the growth rate of hospital prices and that of physician prices. We analyzed growth in both types of prices for inpatient and hospital-based outpatient services using actual negotiated prices paid by insurers. We found that in the period 2007–14 hospital prices grew substantially faster than physician prices. For inpatient care, hospital prices grew 42 percent, while physician prices grew 18 percent. Similarly, for hospital-based outpatient care, hospital prices grew 25 percent, while physician prices grew 6 percent. A majority of the growth in payments for inpatient and hospital-based outpatient care was driven by growth in hospital prices, not physician prices. Our work suggests that efforts to reduce health care spending should be primarily focused on addressing growth in hospital rather than physician prices. Policy makers should consider a range of options to address hospital price growth, including antitrust enforcement, administered pricing, the use of reference pricing, and incentivizing referring physicians to make more cost-efficient referrals.

Item Type: Article
Official URL: https://www.healthaffairs.org/journal/hlthaff
Additional Information: © 2019 Project HOPE—The People-to-People Health Foundation, Inc
Divisions: LSE
Subjects: R Medicine > RA Public aspects of medicine
Date Deposited: 05 Jun 2020 16:33
Last Modified: 20 Oct 2020 06:04
URI: http://eprints.lse.ac.uk/id/eprint/105021

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