The Effects of Multi-Hospital Systems on Hospital Prices

Published in: Journal of Health Economics, v. 26, no. 2, Mar. 2007, p. 400-413

Posted on on March 01, 2007

by Glenn Melnick, Emmett B. Keeler

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U.S. hospital prices are rising again after years of limited growth. We analyze trends in hospital prices during a period of significant price growth (1999-2003) to assess whether hospitals that are part of multi-hospital systems were able to increase their prices faster than non-system hospitals. We find hospitals that were members of multi-hospital systems were able to increase their prices substantially more than comparable non-systems hospitals (34% for large systems and 17% for small systems). Further, we find that the systems effect is not confined to hospitals that have other system member hospitals in their local markets. One possible explanation is that hospitals belonging to non-local multi-hospital systems have improved their bargaining position vis-a-vis health plans.

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