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AHA Pushes Back on RAND's Recent Hospital Pricing Report

Analysis  |  By Melanie Blackman  
   February 19, 2021

CEO Rick Pollack released a statement on behalf of the AHA, stating that RAND "ignores the unique role of hospitals and health systems."

Rick Pollack, CEO of the American Hospital Association (AHA), released a statement Thursday afternoon pushing back on RAND Corporation's recent hospital pricing report.

Pollack took issue with the RAND study, published Thursday morning, which found that regulating hospital prices would save more money than improving price transparency or increasing competition.

In a statement, Pollack said hospitals are “doing their part to contain costs” and added that RAND dismissed rising costs and market concentration among commercial health payers.

"RAND continues to regurgitate older and flawed ‘studies,’ which may be why they land on a poorly-reasoned proposal to have the government regulate prices,” Pollack stated. “Despite claims otherwise, it is widely acknowledged that Medicare and Medicaid – the two largest public programs – pay below the cost of delivering care."

Related: Hospital Price Regulation Has Huge Cost-Saving Potential

According to RAND estimations, setting prices for all commercial healthcare payers could reduce hospital spending between $61.9 billion and $236.6 billion annually if the rates were set from 100% to 150% of the federal Medicare program.

That change would cut overall national health spending by 1.7% to 6.5%, according to the analysis.

"As policymakers consider options for reducing hospital prices paid by private health plans, they will need to weigh the potential impact of different policies on hospital revenues and the quality of care, and they will also need to take into account the political and administrative feasibility of each option," Christopher Whaley, a study co-author and RAND policy researcher, said in a statement.

In response to the study’s policy recommendations, Pollack stated that price-setting would “only enrich commercial health insurers at the expense of innovations in care that truly benefit patients."

The RAND researchers estimate that improving health care price transparency could reduce U.S. spending by $8.7 billion to $26.6 billion per year.

They estimate that increasing competition by decreasing hospital market concentration could reduce hospital spending by $6.2 billion to $68.9 billion annually, depending on the size of the change and market price sensitivity.

"Improving markets through increased price transparency and competition could help reduce prices but would not reduce hospital spending to the extent that aggressively regulating prices could," Jodi Liu, the study's lead author and a policy researcher at RAND, said in a statement. "Direct price regulation could have the largest impact on hospital spending, but this approach faces the biggest political challenges."

Related: Employers and Private Insurers Paid Hospitals 247% of What Medicare Would Have

Editor’s note: This story has been updated to clarify the RAND study’s findings.

Melanie Blackman is the strategy editor at HealthLeaders, an HCPro brand.

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