Variation in markup of general surgical procedures by hospital market concentration

Increasing hospital market concentration (with concomitantly decreasing hospital market competition) may be associated with rising hospital prices. Hospital markup - the relative increase in price over costs - has been associated with greater hospital market concentration.

Patients undergoing a cardiothoracic or gastrointestinal procedure in the 2008-2011 Nationwide Inpatient Sample (NIS) were identified and linked to Hospital Market Structure Files. The association between market concentration, hospital markup and hospital for-profit status was assessed using mixed-effects log-linear models.

A weighted total of 1,181,936 patients were identified. In highly concentrated markets, private for-profit status was associated with an 80.8% higher markup compared to public/private not-for-profit status (95%CI: +69.5% - +96.9%; p < 0.001). However, private for-profit status in highly concentrated markets was associated with only a 62.9% higher markup compared to public/private not-for-profit status in unconcentrated markets (95%CI: +45.4% - +81.1%; p < 0.001).

Hospital for-profit status modified the association between hospitals' market concentration and markup. Government and private not-for-profit hospitals employed lower markups in more concentrated markets, whereas private for-profit hospitals employed higher markups in more concentrated markets.