Study: High Prices May Not Translate to Better Care

The old adage “you get what you pay for” doesn’t neccesarily apply to healthcare, according to a recent study published in the National Bureau of Economic Research. The study examined employer sponsored insurance claims data from the Health Care Cost Initiative (HCCI) spanning from June 2007 to 2014. The results show that there are only specific conditions in which price scales with quality of care, as measured by patient outcomes.

According to Victoria Bailey of Revcycle Intelligence, “The researchers also noted the Herfindahl-Hirschman Index (HHI) of the hospitals, which measures market concentration. The mean hospital HHI was 4,327, while the HHI at the 25th and 75th percentiles were 2,344 and 5,422, respectively.The results revealed that hospitals with higher inpatient prices had a 35 percent reduction in in-hospital mortality, but only when the hospitals were in an unconcentrated market. In addition, each life saved at a high-priced hospital with an HHI of less than 4,000 costs an additional $1.09 million in health spending, which is significantly lower than the $8.7 million estimation from the Environmental Protection Agency, the study noted.”

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(Source Revcycle Intelligence, March 2^nd, 2022)