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AHIP: Hospital Inpatient Pricing Up Sharply

John Commins, for HealthLeaders Media, March 20, 2013

AHIP President and CEO Karen Ignagni said in prepared remarks accompanying the study that "the price of healthcare services is the major driver of overall healthcare cost growth. To make healthcare coverage more affordable for consumers and employers, there needs to be a much greater focus on the underlying cost of medical care." 

The American Hospital Association, however, in a statement given to HealthLeaders Media, dismissed the study's findings as "simply a rehash designed to divert attention from the harmful consumer impacts of health insurers' own rising premiums."

"Hospitals across America are examining ways to make care more affordable by better coordinating care, reducing red tape, and providing the right care at the right time in the right setting. These efforts have led to hospitals to hold costs down, keeping health care spending growth at historically low levels for the third straight year and the rate of growth in hospital cost per service is at a decade-low," the AHA statement read.

"As a study by the American Medical Association found, anticompetitive market conditions are common across managed care plans. It's important to note that growth in insurance costs from 2010 to 2011 was more than double that of the underlying healthcare costs, including hospitals.  It is not hospital prices that are driving the rise in insurance premiums."

The hospital group pointed to a report last year from the Centers for Medicare & Medicaid Services' office of the actuary which found that premium rates for private insurers rose faster than underlying healthcare costs and that for the first time in seven years, growth in total premiums exceeded growth in total benefits.

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2 comments on "AHIP: Hospital Inpatient Pricing Up Sharply"


J. Lauer (3/20/2013 at 10:49 AM)
Good data here, but analysis of the reasons for the increase in prices is weak. A bunch of possibilities are thrown against the wall like spaghetti, but none stick. Seems to me prices are rising because the payer incentives and competition in healthcare are lacking. It was inferred, if not explicitly stated that consolidation has decreased competition even further. Basically, the mess is getting worse.

Aaron (3/20/2013 at 10:23 AM)
Oh Please! While I'm no big fan of insurance companies, their business model inherently must adjust premium prices to cover the expected payments they will pay to their members. No one wants their insurance company to lose money and stop paying claims... right? The real driver that is increasing health care costs is the consolidation of physicians under hospital control. Hospital owned physicians, testing and procedures are reimbursed at 2 to 5 times the rate of the same services at independent outpatient centers. As the hospitals are controlling more and more physicians and demanding all of their testing and procedures remain within their organization, the cost of care has skyrocketed. Insurance companies simply adapt. When insurance companies have tried to fight back and reject the hospital systems annual price increase demands - they are "threatened" with the risk of losing the hospital system and all the physicians they control from that insurance company's plan. Solution: Reimburse hospitals adequately for services they do well that NEED to be done in a hospital i.e. inpatient ICU, ER, etc. But hospitals should no longer be allowed to charge 2-5X more for services that are better served by independent (patient comes first, not hospital finances) outpatient centers. If we continue to allow hospitals to gouge the health care consumer (indirectly through insurance companies) for these services, soon there won't be any cost effective alternatives as the independent physician clinics will be a thing of the past and insurance companies will lose the last tiny bit of leverage they have left.