CHA News Article

New Study on Hospital Consolidation Asserts Higher Prices in California for Some Services
For CEOs

The California HealthCare Foundation has released a new report asserting that hospital consolidation in California has resulted in higher prices for selected health care services. 

The study, which is the latest volley in an ongoing series of academic reports examining the cost of hospital care in California, was conducted by researchers at the Petris Center at UC Berkeley. It contends that prices for many common inpatient and outpatient procedures are “considerably higher” in California than in the rest of the nation — and that the cause of this price differential is hospital and physician consolidation.

The study was released days ahead of the start of a court trial in San Francisco involving accusations that Sutter Health’s integrated system has led to higher hospital prices in Northern California than in the southern part of the state.

CHA is in the process of thoroughly analyzing the study. Some early concerns with the report’s methodology have arisen, including the validity of its market concentration “scores,” which fail to account for the fact that 11 rural counties have only one hospital; the failure to account for non-labor costs such as real estate, utilities, and construction expenses; and the study’s singular focus on commercial fee-for-service payments, when 67% of California’s commercial market includes capitated payment arrangements.

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