Variation in markup of general surgical procedures by hospital market concentration.

BACKGROUND

Increasing hospital market concentration (with concomitantly decreasing hospital market competition) may be associated with rising hospital prices. Hospital markup - the relative increase in price over costs - has been associated with greater hospital market concentration.

METHODS

Patients undergoing a cardiothoracic or gastrointestinal procedure in the 2008-2011 Nationwide Inpatient Sample (NIS) were identified and linked to Hospital Market Structure Files. The association between market concentration, hospital markup and hospital for-profit status was assessed using mixed-effects log-linear models.

RESULTS

A weighted total of 1,181,936 patients were identified. In highly concentrated markets, private for-profit status was associated with an 80.8% higher markup compared to public/private not-for-profit status (95%CI: +69.5% - +96.9%; p < 0.001). However, private for-profit status in highly concentrated markets was associated with only a 62.9% higher markup compared to public/private not-for-profit status in unconcentrated markets (95%CI: +45.4% - +81.1%; p < 0.001).

CONCLUSION

Hospital for-profit status modified the association between hospitals' market concentration and markup. Government and private not-for-profit hospitals employed lower markups in more concentrated markets, whereas private for-profit hospitals employed higher markups in more concentrated markets.