Financial losses don't elicit cost-shifting to patients

The 2008 financial crisis and the deep recession that followed had a negligible effect on the pricing offered by not-for-profit hospitals, according to a new report by the National Bureau of Economic Research.

The 53-page report, authored by three Northwestern University economists, used a variety of sources but relied primarily on Medicare Cost Reports and other related documents from the Centers for Medicare & Medicaid Services.

The research indicated that prices did not budge among most hospitals, even though many experienced double-digit losses in their financial portfolios as a result of the crisis and the 50 percent drop in stock market values that followed.

"This is inconsistent with the predictions of  (previous) model(s) of dynamic cost-shifting," the report states. "Thus, we are inclined to conclude that based on existing theory, the average hospital in the contemporary healthcare system does not cost-shift in response to other financial setbacks, such as reductions in Medicaid or Medicare prices."

Instead, the hospitals delayed health IT investments and scaled back unprofitable services in response to big financial distresses, according to the report.

Nevertheless, the full charges hospitals often impose on uninsured patients are on the rise, reported Bloomberg. A study by Johns Hopkins University found the average full hospital charge rose an average of 10 percent annually between 2000 and 2010.

"It's unconscionable," David Himmelstein,  a professor at City University School of Public Health at Hunter College in New York, told Bloomberg."It adds to the already grave suffering of the uninsured."

To learn more:
- here's the National Bureau report (subscription required)
- read the Bloomberg article

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