- A new report from the Health Care Cost Institute that documents variations in healthcare prices across 112 metro areas in the United States found that overall prices are lowest in Baltimore, where rates were 33% below the national average in 2016, and highest in Anchorage, Alaska, and San Jose, California, where rates were 65% above the national average in 2016.
- According to HCCI, the vast variation in prices per metro area is related to the differences in price levels and the growth of certain service categories, such as inpatient, outpatient and professional services. In El Paso, Texas, for example, professional services prices were 19% below the national average in 2016 while inpatient and outpatient prices were 21% above.
- The report also shows that price levels and growth do not necessarily correlate. Healthcare costs have grown in Tampa, Florida, more than they have any other area since 2012 (21%). Yet, those costs were still 3% below the national average in 2016.
One key finding from HCCI's report is that of the more than 100 metro areas studied, those with highest price levels in 2016 were not necessarily the ones with the largest 5-year price growth, especially per service category.
Healthcare prices were 65% above the national average in both San Jose and Anchorage in 2016. Professional services were 96% above the national average in Anchorage then (10% growth since 2012) and 45% above the national average in San Jose (also 10% growth since 2012). In New York, however, where overall healthcare prices were 10% above the national average in 2016, prices grew by 22% since 2012.
And in Tucson, Arizona, where overall healthcare prices were 22% below the national average in 2016, prices grew by a whopping 20% over the four years.
"Across the U.S., health care prices are rising, but what we saw is that certain areas were dramatically more expensive than others," Bill Johnson, the study's author and senior researcher at HCCI, said in a statement. "There wasn't one single reason a particular area had high or rising prices — the underlying drivers varied from place to place."
For some areas, one reason may be market consolidation. While concentrated markets might be good for health systems' bottom lines, they can be bad for both payers and patients. Some research has shown mergers and acquisitions can drive up prices for patients. One recent analysis of M&A's impact in California found that high concentration is boosting prices for hospitals and physician services, among other areas.
According to that analysis, inpatient prices and outpatient prices were 70% higher in northern California, where market concentration is prevalent, and between 17% and 55% higher, respectively, compared with less-concentrated southern California.
HCCI's report corroborates that analysis.
In highly-concentrated San Francisco-Oakland-Hayward, inpatient prices were 77% above the national average in 2016 (15% growth since 2012) while outpatient prices were 51% above the national average in 2016 (14% growth since 2012). Overall, healthcare prices in this market were 49% above the national average in 2016.
In less-concentrated Los Angeles-Long Beach-Anaheim, inpatient prices were 28% above the national average in 2016 (10% growth since 2012) while outpatient prices were 30% above the national average in 2016 (7% growth since 2012). Overall, healthcare prices in this market were 11% above the national average in 2016.
Unless regulatory action is taken by lawmakers, hospital consolidation isn't likely to stop anytime soon. Nearly 40% of the 1,412 hospital mergers that occurred from 1998 to 2015, for example, were concentrated from 2010 to 2015.