High-Priced Hospitals Not Necessarily Better

Although high-priced hospitals enjoy health financial margins and strong reputations, a new study found that they generally scored worse than other hospitals on measures of quality.

The article, published in the January issue of Health Affairs, found that quality indicators for high-priced hospitals were mixed. Authors Chapin White, James D. Reschovsky, and Amelia M. Bond sought to understand why some hospitals could negotiate such higher prices than competitors. For instance, the highest-priced hospital in a market typically was paid 60% more than the lowest-priced hospital, according to the research.

The researchers analyzed data from 110 hospitals and the price calculations from more than 24,000 inpatient stays.

While hospital size was the most obvious difference between low- and high-priced hospitals — with the latter averaging more than double the number of staffed beds and holding market share three times what low-priced hospitals had — high-priced hospitals were also more likely to be teaching hospitals, belong to systems and provide specialized services.

“Compared to lower-price institutions, the high-price hospitals in our study treated a sicker and poorer patient population, more of their patients were transfers from other short-term hospitals, and they provided far more graduate medical education,” the authors wrote.

Measuring quality is difficult, though. The researchers point out that the hospital rankings in U.S. News and World Report are largely reputation based. And while the high-priced hospitals performed better in reputation (none of the low-priced hospitals were ranked), their performance on outcome-based quality measures was mixed.

“They performed worse than the low-price hospitals on measures of excess readmissions and on patient-safety indicators, including postsurgical deaths and complications,” the authors wrote.

However, only the outcomes in postsurgical death rates and blood clots were statistically significant. Otherwise, high-priced hospitals performed the same as low-priced hospitals on 30-day mortality rates for heart attack and pneumonia. High-priced hospitals did perform better on the 30-day mortality rate for heart failure patients.

The authors did point out that it’s possible that high-price hospitals do provide higher-quality care but simply treat sicker patients who are more socioeconomically disadvantaged.