Why Hospital Prices Are Rising Fast
Health Care

Why Hospital Prices Are Rising Fast


Prescription drugs get much of the attention when it comes to soaring medical costs, but a new study published in Health Affairs finds that hospital prices have been rising quickly as well — more quickly than physician fees.

Reviewing the prices actually paid for various services between 2007 and 2014, the authors found that hospital prices rose 42 percent for inpatient care and 25 percent for hospital-based outpatient care, while physician fees rose 18 percent and 6 percent respectively.

One of the study authors, Zack Cooper of Yale University, told Modern Healthcare that hospital fees are the largest component of health care costs in the U.S., and that industry consolidation appears to explain some of the increase in prices. “What is most worrying to me is that there has been fairly profound consolidation among hospitals and when they gain market power they have the ability to raise prices," Cooper said. "They have the ability to gain more favorable contractual terms, which allows them to raise prices and resist the new, more sensible payment reforms."