- Yuvraj Pathak: West Health, San Diego, CA, USA. ypathak@westhealth.org.
- David Muhlestein: Simple Healthcare, Sanford, FL, USA.
BACKGROUND: The goal of this study is to estimate the association between hospital system market share and negotiated prices. Hospital system consolidation has led to many highly concentrated markets where systems can leverage their market share to negotiate higher commercial prices. Recently, the Centers for Medicare & Medicaid Services, under its Transparency in Coverage initiative, required health insurers to release all negotiated commercial prices, providing, for the first time, publicly available, nationally representative data on commercial rates. We utilize this newly available data on negotiated prices of healthcare services to show that a hospital with 10% higher market share charges 880-1,180 more per admission.
STUDY DESIGN: We used commercial price data for national networks of three large, national insurers and performed a linear regression based on more than 1.3 million negotiated rates across 1,784 hospitals to estimate the association between a hospital's system-level market share and commercial negotiated rates, adjusting for service (DRG), health system, and area level time-invariant characteristics.
RESULTS: We find that a one percentage point increase in hospital system market share is associated with an $88 to $118 higher negotiated rate per admission. All else equal, a hospital that is part of a system with a 10-percentage point higher market share can expect from $880 to $1,180 more per admission relative to a hospital with lower system market share (5.4% to 6.2% of the median price).
CONCLUSION: These findings confirm that higher hospital system market share is strongly associated with higher commercial negotiated prices and should aid policymakers and decisionmakers in assessing the impact of various policy options aimed at reducing provider consolidation in the healthcare market.
TRIAL REGISTRATION: Not applicable.