This NBER Working Paper says it depends on whether there is competition.
In markets with more hospital competition, going to higher-priced hospitals raises spending by approximately 53 percent and lowers mortality by 47 percent. By contrast, in concentrated hospital markets receiving care from a high-priced hospital also raises spending by 54 percent, but has no impact on patient outcomes.
And the higher spending in competitive markets is worth it:
Such hospitals spend approximately $1 million per life saved. Assuming that the individuals in the research sample live for another nine years, this is cost effective relative to the Environmental Protection Agency’s $8.7 million benchmark estimate of the value of a statistical life.
Unfortunately, the trend in the overall market is for more concentration and less competition.
1 thought on “Do Higher Priced Hospitals Deliver Higher Quality Care?”
I’m reminded of the Gruber/Anthem CALPERS study on reference pricing for joint replacement in California. Anthem identified nearly 50 hospitals that were low priced with similar outcomes as the high-priced hospitals. It instituted a policy where its reference price was $30,000. Any additional costs were borne by the patient. Within a year, the low-priced hospitals had reduced their prices slightly while the high priced hospitals had reduced their priced a lot.