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Analysis

Metro Areas With High Prices Have Low Utilization Rates

By Jack O'Brien  
   March 12, 2019

A five-year study analyzed the healthcare prices and utilization rates across 112 metropolitan areas.

The Health Care Cost Institute (HCCI) published an interactive report Tuesday morning that detailed the variation between commercial healthcare prices and overall utilization rates in metropolitan areas. 

The healthy marketplace index tool, funded in part by the Robert Wood Johnson Foundation, examined commercial healthcare prices and utilization rates in more than 100 cities between 2012 and 2016.

During the course of the study, median healthcare prices in surveyed metropolitan areas rose 13% while overall utilization rates declined 17%.

Ultimately, HCCI determined that there was an inverse relationship among metropolitan areas, as those with high utilzation rates tended to have lower prices, while those with low utilization rates had higher overall prices.

There were a few outliers to this trend, most notably the Milwaukee and New York markets, which were nationwide leaders in both high price levels and high utilization rates.

Related: Rising Prices Lead to All-Time High Healthcare Spending

Baltimore led the nation in both lowest overall prices, 26% below the national average, and highest overall utilization rate, 34% above the national average.

The areas with the highest prices were Anchorage, Alaska and San Jose, California, 82% above the national average, while Riverside, California finished with the lowest utilization rate, 56% below the national average.

Bill Johnson, PhD, lead author of the HCCI study, said the findings "underscore the need to dive into the data and understand the local factors explaining health care costs."

Related: Employers Rewarding Patients for Choosing Lower-Priced Providers

Later in the report, researchers indicated that variations in utilization rates could be due to numerous factors, including consumer demand, provider concentration, and provider practice patterns.

The study included data from nearly 2 billion commercial healthcare claims and is sortable by inpatient, outpatient, and professional services.

Even within a certain metropolitan area, such as Trenton, New Jersey, there were noticeable differences among the three categories. 

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


KEY TAKEAWAYS

Bill Johnson, PhD, lead author of the HCCI study, said the findings "underscore the need to dive into the data and understand the local factors explaining health care costs."

Baltimore led the nation in both lowest overall prices and highest overall utilization.

The areas with the highest prices were Anchorage, Alaska and San Jose, California; Riverside, California finished with the lowest utilization rate.


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