Hospital prices increased more than physician’s prices for less procedures

UnitedHealth Group researched how hospital price increases for inpatient services will cost consumers and employers $250 billion over the next decade.

The key findings from the research are:

  • Hospital prices increased faster than physician prices between 2013 and 2017:
  • 19% increase for hospital prices (4.5% per year)
  • 10% increase for physician prices (2.5% per year)
  • Over the same period, utilization of inpatient services delivered by hospitals and physicians each declined 5%

If hospital price increases for all inpatient services were moderated by just two percentage points per year between 2020 and 2029, hospital inpatient spending for privately insured individuals would bereduced by over $50 billion in 2029 and $250 billion over the decade

This research brief addresses the drivers of hospital inpatient spending growth among privately insured individuals, which are influenced by:

  • Prices paid for services delivered by hospital facilities (hospital prices),
  • Prices paid for services delivered by physicians practicing within these hospitals (physician prices), and
  • Patients’ utilization of inpatient services

Lambert van der Walde, Senior Vice President of Government Research for UnitedHealth Group, said the hospital price growth needs to be at a more reasonable level.

"Hospital inpatient spending is driving the overall costs of hospitalizations at a rate much greater than the increase in physician pricing," said van der Walde.

He said it's common for insurers to want to keep costs a reasonable rate.

"The challenge is that in many markets, you have hospitals with tremendous market power that are essentially able to set the prices," said van der Walde.

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