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Are More Expensive Hospitals Better Hospitals?

The data tends to say they are not, even when you factor in outcomes of the patient care. A new study in the journal Health Affairs finds no clear evidence that more expensive hospitals are actually providing better health care. Lets into some of their research and charts and see what we can learn.
As you might expect larger hospitals with more market share, charge higher prices.
Hospital Marketshare and Pricing
Large hospitals with a higher percentage of marketshare have far more leverage in negotiating higher prices with insurers because well they often offer services that their competitors do not, like, for example, more advanced trauma centers. That makes it harder for insurance plans to keep them out of network.
Hospitals & Specialized Services
What is interesting is when the research team looked at specific health outcomes, including deaths among patients with complex surgeries, accidental cuts and tears during medical treatment and readmission rates for a handful of conditions. What they found was, well, no clear relationship between price and outcomes. None of the low-price hospitals made the U.S. News list, but they didn't seem to do worse on quality of care than the high-priced competitors.
Patient Outcomes
It is hard to say what to take away from a study like this. It appears to indicate health plans could reduce their spending by steering people to lower-priced hospitals and patients wouldn't necessarily be worse off or getting lower quality are, even though they're going to lower-priced hospitals. But then again, I do equate price with quality, as I assume many individuals do, so they are not going to want to read this research study when a family member is sick, but get them in the best hospital possible (which BTW is usually the most expensive).
health-accounts-crop-180x100Thomas (Tom) E. Hamilton is founder and CEO of Hamilton Edwards Benefit Partners, provider of Private Health Exchange platform of third party and insurance services. He is also founder of Benefit Partners University, a training and education program for Brokers looking to provide innovative solutions in the employer benefits market. You can click here to email Tom or reach him via phone at 704-375-1112.
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