Prices for Medical Services Vary Within Hospitals, But Vary More Across Them

31 Pages Posted: 14 Dec 2018

See all articles by Nathan Wilson

Nathan Wilson

Government of the United States of America - Federal Trade Commission, Bureau of Economics

Ted Rosenbaum

Federal Trade Commission Bureau of Economics

Matthew Panhans

Federal Trade Commission Bureau of Economics

Date Written: December 2018

Abstract

Using commercial claims for 2012-2013 from Colorado’s All-Payer Claims Database, we examine how medical service prices vary for five hospital-based procedures and the complexity adjusted inpatient price. We find that prices vary substantially in multiple dimensions. Our analysis indicates that there is significant price variation across payers for the same service in the same hospital. If prices converged to the lowest rate each hospital receives, commercial expenditures would fall by 10-20%. The share of overall price variation accounted for by hospitals variation tends to be even more substantial. For four out of six prices, we find that differences associated just with hospitals’ metropolitan areas account for over 45% of the total variation. We observe substantial residual variation (17-50%) after accounting for factors specific to a given payer or provider.

Keywords: price dispersion, hospitals, payers, bargaining

JEL Classification: I11, L11

Suggested Citation

Wilson, Nathan and Rosenbaum, Ted and Panhans, Matthew, Prices for Medical Services Vary Within Hospitals, But Vary More Across Them (December 2018). Available at SSRN: https://ssrn.com/abstract=3299591 or http://dx.doi.org/10.2139/ssrn.3299591

Nathan Wilson

Government of the United States of America - Federal Trade Commission, Bureau of Economics ( email )

600 Pennsylvania Avenue, NW
Washington, DC 20580
United States
202 326 3485 (Phone)

Ted Rosenbaum

Federal Trade Commission Bureau of Economics ( email )

600 Pennsylvania Ave NW
Washington, DC 20580
United States

Matthew Panhans (Contact Author)

Federal Trade Commission Bureau of Economics ( email )

600 Pennsylvania Ave NW
Washington, DC 20580
United States

Register to save articles to
your library

Register

Paper statistics

Downloads
7
Abstract Views
103
PlumX Metrics