Hospital prices up slightly, consolidation could push them higher

Hospital prices nationwide rose a modest 2.2 percent between last month and May 2011, echoing a trend of overall flat healthcare spending, according to data from the Bureau of Labor Statistics (BLS) released last week. However, market consolidation could cause prices to rise again in the short term, reported Crain's Chicago Business.

Altogether, hospital prices rose 0.1 percent in May, according to the BLS. That's a comparatively low increase from April, as overall healthcare prices rose 0.2 percent. Nursing care facility prices rose 0.5 percent; home healthcare services increased 0.2 percent. However, the prices for in-office physician services did not rise at all.

Continued market consolidation may change that dynamic. According to Crain's, three operators control nearly a third of the Chicago hospital market, up from 27 percent in 2007. Consolidation is occurring in other cities such as New York, where NYU Langone Medical Center recently announced a merger with Continuum Health Partners, reported The New York Times. And Steward Health Care in Massachusetts continues to buy up properties in the New England market.

"It is a big threat," Robert Town, associate professor of healthcare management at the University of Pennsylvania, told Crain's. "As hospital markets become more consolidated, hospitals gain bargaining power ... and prices tend to go up."

For more:
- check out the BLS data
- read the Crain's Chicago Business article (registration required)
- here's the New York Times article