Study finds that organizational market power not the cause behind rising health costs

Hospital prices, and not mergers and organizational market power, are the reason for increasing costs in health care, according to a study by the American Hospital Association. 

The study’s findings reflect the earlier findings of a similar study.  Key findings from the study include:

  • Hospital prices are directly related to the cost of care.
  • Spending on rapidly growing labor force explains a substantial proportion of overall costs to hospitals.
  • Another factor in cost is the increased number of patients covered by Medicare and  state programs; neither of which pays the full cost of care. 

The study concludes that there is no data to show that remaining differences in cost are due to market power, a more likely cause is higher cost associated with providing higher quality care. 

(Sources:  AHA News Now, http://ahanews.com, March 8, 2011; American Hospital Association, http://www.aha.org, March, 2011)