Hospital Prices Grew Substantially Faster Than Physician Prices For Hospital-Based Care In 2007-14

Area of Science:

• Health Economics
• Healthcare Policy
• Health Services Research

Background:

• Rising healthcare spending is a major concern for privately insured populations.
• Previous studies have not clearly distinguished the impact of hospital versus physician price growth on overall spending.

Purpose of the Study:

• To systematically differentiate and compare the price growth rates of hospitals and physicians for inpatient and outpatient services.
• To identify which provider type contributes more significantly to healthcare spending growth.

Main Methods:

• Analysis of actual negotiated prices paid by insurers for inpatient and hospital-based outpatient services.
• Examination of price growth trends for hospitals and physicians between 2007 and 2014.

Main Results:

• Hospital prices grew substantially faster than physician prices from 2007-2014.
• For inpatient care, hospital prices increased by 42% versus 18% for physician prices.
• For outpatient care, hospital prices rose 25% compared to 6% for physician prices.

Conclusions:

• Hospital price growth, not physician price growth, was the primary driver of increased healthcare payments for inpatient and outpatient services.
• Strategies to curb healthcare spending should prioritize addressing hospital price inflation.
• Policy interventions such as antitrust enforcement, administered pricing, and reference pricing are recommended to manage hospital price growth.