The study found that employers in Indiana should redesign their health plans to bring hospital prices more in line with national norms and to better align prices with the quality and value of the care provided. Large employers can use price data to gradually rein in unreasonably high prices, especially for hospital outpatient services.
Over the medium term, employers can advocate for changes in the terms of the contracts between their health plans and hospitals, to shift away from contracts that pay hospitals discounted charges. Employers were also encouraged to explore options for moving patient volume away from high-priced hospitals and hospital systems.
Over the longer term, employers were asked to support efforts promoting competition in healthcare markets by opposing consolidation among existing providers and promoting entry of new, lower-priced providers.
Large Hospital Systems Were Generally Paid Higher Prices
- The relative prices of hospital care varied widely among groups of hospitals and hospital systems, from around two times Medicare at the low end to more than three and a half times Medicare at the high end.
- The upper end of the price distribution was dominated by the six large hospital systems.
Hospital Prices Varied Widely, Particularly for Outpatient Services
- Employers participating in this study paid, on average, 358 percent of the Medicare rate for hospital outpatient services.
- The prices paid for outpatient care varied widely from system to system and from hospital to hospital.
- There was significant variation in hospital outpatient prices within systems. Within three large systems, the flagship facility was at or near the top of the price range within that system, while other, smaller hospitals within those systems tend to be paid lower outpatient prices.
Relative Prices Were Increasing
- Overall relative prices have been rising over the period of the study, with particularly steep increases for Parkview Health and Community Health Network. Only one Indiana system — Community Health Systems/Lutheran — had flat or declining relative prices from 2013 through 2016.
Relative Prices Were Consistent Across Types of Service
- Although relative prices for outpatient services varied widely from hospital to hospital, within a given hospital they were generally similar across different types of services.
- For inpatient services, overall relative prices tended to be higher for circulatory conditions and lower for childbirth, substance abuse, and mental health conditions.