How price controls helped a rural Maryland hospital thrive

A rural Maryland hospital has seen admissions and readmissions decline in the past three years amid a series of innovative reforms, the New York Times reports.

Western Maryland Health Systems, the only major hospital in the Cumberland, Md., region, has taken steps that aim to continue safeguarding patients' health outside of the hospital proper; they include a wound center, a behavioral health clinic and a diabetes clinic, along with an increase in primary care practices and staffers who follow up with the infirm or elderly after discharge.

Over the past three years, admissions declined 15 percent and readmissions fell from 16 percent to 9 percent of all patients. In addition, the hospital reported a profit of $15 million in the last fiscal year; the hospital brings in about $370 million in revenue.

Western Maryland, along with nine other hospitals in rural areas, made an agreement with Maryland's Health Services Cost Review Commission in 2010 that allowed them a guaranteed budget to experiment with healthcare solutions in their community. If the hospital runs a deficit, it is permitted to raise prices to make it up, but must lower prices in the event of a surplus.

This model is possible because Maryland's hospitals have had price controls since the 1970s, and as a result, patients pay approximately the same whether they have private insurance, Medicare or no insurance. Between 1977 and 2010, according to the Times, Maryland had the slowest increase in per-patient medical costs in the nation. Prior to the implementation of price controls, the cost per patient in Maryland was 26 percent higher than the national average.

Maryland is one of seven states that have implemented price controls. While all but Maryland and West Virginia have discontinued the practice, a study by the Commonwealth Fund found Maryland, along with Massachusetts, New York and New Jersey "had some of the lowest rates of hospital cost increases among all the states" while price controls were in place.

To learn more:
- here's the Times article