The same cohort of authors responsible for the Health Care Pricing Project’s flawed 2015 paper recently released an updated version. However, the update fails to upgrade the paper’s status as an unreliable attempt to link hospital concentration and price. 

 

Although the paper claims to consist of new updates, it relies on old data – and in some instances, on decade-old data ­– that seriously predates the effects of public and private payers shifting to value-based payments. The paper also excludes data from Blues plans – which dominate the insurance market in at least 40 states – and fails to adequately account for the significant effects of commercial insurer concentration. With an arbitrary mileage radius to define hospital markets, the geographic areas used to assess hospital market structure don’t accurately measure competition. And finally, the paper’s measure of total spending per beneficiary fails to account for drug spending, which, between FY2013 and FY2015, soared by 38.7 percent on a per admission basis and by an average 23.4 percent annually on an inpatient basis.

 

A study on the benefits of hospital mergers by Charles River Associates in January 2017, which used more recent data, found that “net patient revenue per admission—which includes revenue associated with patients covered by commercial MCOs—declined at the acquired hospitals in our study relative to revenue at comparable non-merging hospitals.”[i] This is directly contrary to the authors’ suggestions (based on older data) that contemporary mergers result in price increases. That same study found that mergers have the potential to drive quality improvements through standardization of clinical protocols and investments to upgrade facilities and services at acquired hospitals. In addition, mergers typically expand the scope of services available to patients, and build upon existing institutional strengths to provide more comprehensive and efficient care.

 

 

[i] Hospital Merger Benefits: Views from Hospital Leaders and Econometric Analysis. Charles River Associates. January 2017

Related News Articles

Headline
The House of Representatives last night voted 419-6 to pass legislation (H.R. 748) that would repeal the 40% excise tax on high-value employer-sponsored health…
Headline
The ERISA Industry Committee has withdrawn its support for legislation approved yesterday by the House Energy and Commerce Committee to address surprise…
Headline
The House Energy and Commerce Committee today approved legislation to address surprise medical bills and Medicaid disproportionate share hospital cuts.
Headline
Congress should pass legislation that would protect patients from surprise medical bills; preserve the ability of providers and insurers to negotiate private…
Headline
The Centers for Medicare & Medicaid Services yesterday released a proposed rule that would revise certain requirements for long-term care facilities.
Blog
A recent American Enterprise Institute blog on hospital prices fails to capture the full story on how hospitals and health systems have slowed price growth.