Health care concentration and prices going up, use going down in metro areas
Despite the overall trend, there can be wide variations of usage, cost and concentration between—and even within—metro areas.
A new report from the Health Care Cost Institute (HCCI) finds that concentration of health care facilities is growing, along with health care prices, while at the same time usage levels of health care services have been decreasing.
The new report is available as an interactive website that allows visitors to check the data on specific metro areas and compare data between cities. The HCCI’s “Healthy Marketplace Index” provides details from 112 metro areas in 43 states. The group’s site uses data from more than 1.8 billion health care claims of commercial health plans during the period of 2012 to 2016.
HCCI’s work, funded by the Robert Wood Johnson foundation, supports other research that suggests concentration in health care markets is linked to reduced competition and increased costs. However, the researchers note that there can be wide variations of health care usage, cost, and concentration between—and even within—metro areas.
Related: Study: High prices still the cause of ridiculous health care spending
Market concentration is on the rise
Using Department of Justice measurements, the study found that nearly three-quarters (72 percent) of the health care markets studied qualify as highly concentrated. An interesting finding was that larger markets such as New York City or Chicago tended to have less-concentrated markets; smaller metro areas tended to have the most-concentrated markets.
The researchers concluded that an important factor was whether patients could seek care in other markets/metro areas. “In nearly every metro area, the majority of residents received inpatient care from a hospital within that same metro area,” the study said. “For example, in St. Louis, Missouri, residents were almost exclusively admitted to hospitals within their own region (97 percent of admissions). However, in other metros, hospitals may compete with those in nearby areas. For instance, only 56 percent of residents from Akron, OH were admitted locally, with many Akron residents instead obtaining care in Cleveland.”
The study noted that metro areas may draw patients from neighboring markets due to factors such as teaching hospitals, preferred specialists, or lower prices.
Concentration of health care markets is common in the U.S. and continues to grow, the report noted. In 2012, a majority of hospital markets (67 percent) were considered highly or very highly concentrated; the study said that by 2016, that number had increased to 72 percent of metro areas by.
“One of the most often-cited reasons for increasingly concentrated markets is consolidation due to hospital systems merging together or acquiring new hospitals,” the report said. “These have become increasingly frequent, with 680 hospital mergers occurring in just this decade.”
Prices and usage levels—one going up, one going down
The study looked at variation in both price and use of health care services, looking at links between prices and usage—whether higher prices were linked to higher or lower usage, for example. The study found a considerable amount of variation, but the HCCI researchers noted a general trend: metro areas with higher prices tend to have lower usage levels.
The study concluded by noting that health care prices in the metro areas studied increased on average over the 2012-2016 time period, while usage levels decreased. The median price growth was 13 percent—almost three times faster than inflation. In the same time period, the median metro area saw a 17 percent average reduction in overall use levels. Prices increased in all but one metro area during the time period, and use levels decreased in all but three metro areas, the study said.
“From 2012 to 2016, overall use of health care services fell in almost all metro areas,” the study said. However, it noted that there remains a good deal of variation in usage data across service categories. “While use of inpatient and professional services fell in nearly all metro areas, use of outpatient services actually increased in a fair number of metro areas,” the study said.
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