emergency-sign-at-hospital-300x201-7290191Some New York hospitals are commanding far higher prices than their regional competitors, and market leverage – not quality or demographic factors – is the most likely explanation, according to an important new study from the New York State Health Foundation.

The most expensive hospitals are being paid 1.5 to 2.7 times more than the lowest-priced hospitals in their areas, the study found. The higher-cost facilities did not consistently deliver better quality of care, treat sicker patients, or have the prestige of being an academic medical center.

“Hospitals with higher prices do not necessarily have higher quality,” the report says. “Likewise, hospitals with lower prices do not necessarily have lower quality.”

There is a statistical correlation between higher prices and a hospital’s market leverage, the authors found: Hospitals that controlled a large market share, or were members of broad systems, or were the only local providers in rural areas tended to receive bigger payments.

The findings suggest that a wave of consolidation has given some hospitals too much bargaining clout in negotiations with insurers. The authors also link the disparities to a lack of transparency in hospital pricing and contracting practices that prevent health plans from steering customers to affordable providers.

The study questions the idea that hospitals negotiate for higher prices to offset the lower reimbursements they get from government-sponsored health plans. In general, hospitals treating more Medicare and Medicaid patients charged lower prices, while hospitals treating fewer Medicaid and Medicaid patients charged more.

Hospitals account for about 40 percent of overall healthcare spending, the study said.

The report, prepared by a team led by Gorman Actuarial Inc. of Massachusetts, analyzed the pricing of 107 hospitals in the New York City, Albany, and Buffalo regions, using non-public data obtained from nine insurers under an order by the Department of Financial Services.

The study recommends policy changes aimed at boosting the competitiveness of New York’s hospital market, such as making hospital pricing details more readily available to the public and barring contract provisions that block insurers from steering customers to lower-cost institutions.

The study is modeled on research by the Massachusetts Attorney General’s Office in 2010, which documented similar disparities in hospital pricing. The findings prompted Bay State lawmakers to gather and publicize more data on hospital pricing, establish a target growth rate for overall healthcare spending, and sanction facilities whose costs rise too fast.

For more on the Health Foundation’s study on hospital pricing, see coverage by the Times Union and Modern Healthcare.

 

About the Author

Bill Hammond

As the Empire Center’s senior fellow for health policy, Bill Hammond tracks fast-moving developments in New York’s massive health care industry, with a focus on how decisions made in Albany and Washington affect the well-being of patients, providers, taxpayers and the state’s economy.

Read more by Bill Hammond

You may also like

The House GOP’s Shrinking Budget Plan Could Still Cost New York Billions

The likely impact of federal health-care cutbacks has diminished in recent days as House Republican leaders backed away from some of their bigger-ticket proposals, reducing the estimated savings to $625 billion from previous figures of $715 billion and $8 Read More

Feds Move To Close Medicaid’s ‘MCO Tax’ Loophole, Spelling Trouble for New York

New York's budget has sprung its first major leak just five days after being finalized by Governor Hochul and the Legislature. On Tuesday, federal officials announced a that would Read More

Highlights of Albany’s Bloated and Belated Budget

The state Legislature approved the last of nine budget bills Thursday evening, 38 days after the start of the fiscal year. Here are some highlights of the fiscal impact of final spending plan: Top lines Read More

Unforeseen Consequences

We acknowledge that the impact of these measures will be determined by their scope, implementation timeline, pace, and advancements in technology, infrastructure, and market dynamics.  Read More

Forcing Homes to Switch to Electric Heat is not a Good Policy

  New York has some of the most ambitious climate goals in the country: electric school buses by 2035, zero emissions electricity by 2040, etc. Why New Yorkers, who already consume less energy per capita than any state (other than Rhode Island), s Read More

How Medicaid ‘Expansion’ Changes Could Affect New York

As House Republicans consider cutbacks to federal Medicaid funding, their focus has turned to the so-called expansion population. Although the details of remain undetermined, the s Read More

How Albany Could Save Millions by Closing a Medicaid Loophole

A glitch in state insurance law is allowing doctors to collect Medicaid fees that are sometimes hundreds of times higher than the program normally pays, costing taxpayers millions of dollars a year. Read More

After Tariff Shock, Albany Should Face its New Fiscal Reality

This year, for once, state lawmakers' failure to pass a timely budget could prove to be a stroke of luck. When President Trump rolled out his on April 2, Albany leaders had not agreed on a spending plan for the f Read More