Hospitals designated as trauma centers are charging more than their counterparts for nontrauma admissions and emergency department visits, suggesting that the local monopolies over trauma services many of these facilities run can bleed into other areas of care, according to a new study.
The analysis, published Monday in Health Affairs and funded in part by Arnold Ventures, draws attention to the incentives state or substate regulators employ to encourage providers’ new or sustained operation of trauma care services. These can include restrictions on new entries into markets with an existing trauma center, or requirements that all trauma patients in a region are brought to the area’s designated trauma center hospital.
“However, these regulations have not addressed the possibility that endowing hospitals with market power over trauma services may also enable them to raise prices for nontrauma services,” researchers from Stanford University and the University of Southern California, Los Angeles, wrote in the journal.
To explore this, the researchers reviewed eight years (2011-2018) of health plans’ paid claims among a sample of roughly 2,000 hospitals, 2 million inpatient admission and 10 million ED visits. The portion of hospitals within the sample with trauma center designations grew over the study period from 21% to 28%, similar to the rising share of nontrauma patients that were admitted to a trauma center hospital (41% to 50%) or were seen in a trauma center hospital’s ED (34% to 44%).
By comparing these patients to those receiving care at hospitals without the designation, researchers found that the prices for nontrauma inpatient admissions and ED visits were 4% higher and 3% to 5% higher, respectively, at hospitals designated as a trauma center. Those differences persisted after controlling for potential confounders or for hospital fixed effects, according to the study.
“Our findings provide empirical support for the notion that provider market power in one area can be leveraged to affect prices in other areas,” the researchers wrote.
The authors noted that the No Surprises Act’s limitations on out-of-network charges for emergency services could reduce the differences in prices brought by trauma centers’ leverage.
Still, the data add a new point of consideration for policymakers looking to preserve trauma care in hard-to-serve areas, they said, as well as for those hoping to reduce hospital prices and broader healthcare spending, they wrote.
“Policy makers and regulators may need to develop policies to account for this tension between public health priorities and the possible impact on competition and price,” they wrote.