Analysis of commercially negotiated hospital prices for spinal deformity surgery in the United States
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Published on: February 9, 2024
Jonathan Wang1, Rodrigo Saad Berreta2, Eric Mao1
1School of Medicine, Johns Hopkins University, 733 N. Broadway, Baltimore, MD 21205, USA.
Background Context:
Spinal deformity surgery is among the most resource-intensive inpatient procedures in the United States. Despite increased transparency in commercial pricing, the structural drivers of cost variation for complex spine surgery remain unclear.
Purpose:
To characterize hospital-, market-, and community-level factors associated with variation in commercially negotiated prices for thoracolumbar spinal deformity surgery.
Study Design/Setting:
Cross-sectional analysis.
Patient Sample:
A total of 6,253 commercially negotiated prices for surgical thoracolumbar spinal deformity treatment (MS-DRG 456-458) were analyzed from 2,449 US hospitals across five major commercial payers.
Outcome Measures (Functional Measures):
The primary outcome measure was the log-transformed commercially negotiated price for thoracolumbar spinal deformity surgery.
Methods:
Hospital-level variables included bed size, teaching status, ownership, Case-Mix Index (CMI), and system affiliation. Market-level variables included wage index and concentration (Herfindahl-Hirschman Index). Community-level variables encompassed uninsured rate, Social Deprivation Index, racial composition, and population health metrics. Prices were log-transformed to address skewness. Multivariable linear regression utilized a hospital-payer-DRG contract-level dataset (n=6,253 contracts from 2,449 hospitals), reflecting 30.5% attrition from the initial 3,526 hospitals due to complete-case exclusion for missing covariates (eg, wage index and CMI).
Results:
The fully specified model, inclusive of state and insurer fixed effects (adjusted R²=0.244), revealed that system affiliation was the strongest predictor of higher prices, with affiliated hospitals charging 21.1% to 41.8% more (p<.001). Larger bed count (p=.008) and higher CMI (p=.015) were also associated with higher prices, whereas nonteaching hospitals (p=.042) had lower prices. Higher labor costs (p<.001) and lower market competition (7.5%-7.8% higher prices, p<.05) were each associated with higher prices. At the community level, higher uninsured rates (+13.4% per SD, p=.020) correlated with higher prices, whereas poorer health (-6.9% per SD, p=.045) and lower Social Deprivation Index (-4.1% per SD, p=.048) were linked to lower prices.
Conclusions:
Hospital system size, labor costs, market concentration, and community context were associated with substantial variation in negotiated prices for surgical spinal deformity treatment.
