Basics of Hospital Pricing

Ian McCarthy | Emory University

But first…

Some basics of data management

  • Let’s not reinvent the wheel!
  • Let’s review some excellent resources from Grant McDermott

Hospital Prices

What is a hospital price?

Defining characteristic of hospital services: it’s complicated!

What is a hospital price?

Lots of different payers paying lots of different prices:

Price \(\neq\) charge \(\neq\) cost \(\neq\) patient out-of-pocket spending

What is a hospital price?

What is a hospital price?

Not clear what exactly is negotiated…

Fee-for-service

  • price per procedure
  • percentage of charges
  • markup over Medicare rates

Capitation

  • payment per patient
  • pay-for-performance
  • shared savings

Hospital prices in real life

A few empirical facts:

  1. Hospital services are expensive
  2. Prices vary dramatically across different areas
  3. Lack of competition is a major reason for high prices

Hospital prices in real life