IBJNews

Study: Indy hospitals charge 'excess' prices

Back to TopCommentsE-mailPrintBookmark and Share

The Big 3 automakers spent 35 percent more in the Indianapolis area to provide health care for workers and non-elderly retirees than they did in other auto-heavy cities—and two-thirds of that difference can be blamed on “excess prices” by Indianapolis hospitals.

That’s the conclusion of an extensive analysis released this month by the Center for Studying Health System Change and the National Institute for Health Care Reform.

The findings of the study, released Feb. 15, show that General Motors Corp., Ford Motor Co. and Chrysler Group LLC paid an average of $7,900 per Indianapolis-area worker to cover health care expenses.

The average was $5,800 per worker in all 19 auto hubs considered in the study, which included Cleveland;, Detroit; St. Louis; Kokomo; Flint, Mich.; Youngstown, Ohio; and Buffalo, N.Y. Health care spending in Indianapolis was higher than all other regions except for Lake County, Ill.

Of the $2,100 difference between Indianapolis and its peers, roughly $1,400 was due to higher prices by hospitals. The rest could be blamed on the Indianapolis autoworkers being, on average, older and more heavily male than in the other cities.

“The study findings suggest that opportunities to control spending growth lie in restraining hospital prices and in improving people’s health status,” wrote study author Chapin White, a senior researcher at the Center for Studying Health System Change, a not-for-profit based in Washington, D.C.

Because the benefits for autoworkers and retirees (who are not yet eligible for Medicare) were all negotiated by the United Autoworkers Union, the richness of benefits was uniform in all cities, White noted.

White’s study was based on 2009 data from the private health insurance plans—mostly Blue Cross and Blue Shield—that helped administer the autoworker benefits, which are paid for by the auto companies themselves. Those data were collected by the market research firm Thomson Reuters.

Indianapolis-area autoworkers consumed 12 percent more in health care services than their peers in the 18 other auto hubs. That was mostly due their age and sex.

When White adjusted the autoworkers’ health care spending for those two factors, the Indianapolis workers had slightly better health than their peers in the other cities.

So the quantity of services in Indianapolis, when adjusted for age, sex and health status, was actually 4 percent less than the average in the other cities. This finding suggested that doctors and hospitals are not prescribing unneeded tests and procedures—at least no more so than their peers in the other cities.

But the big difference came on the price side. Even though it costs 3 percent less to operate health care businesses in Indianapolis than the 18 others cities, prices here were 22 percent higher.

When total prices and cost of doing business were combined, Indianapolis was the most expensive city in the study—with prices 26 percent higher than the average.

The blame for higher prices in Indianapolis rests almost entirely with hospitals, White’s study showed. He made this conclusion after comparing prices paid by the auto companies—through the Blue Cross and Blue Shield plans—against the prices paid by Medicare, the federal health plan for seniors.

Whereas Indianapolis-area physicians charged prices 4 percent higher than Medicare, hospital inpatient prices here were 78 percent higher and hospital ER prices were 200 percent higher than Medicare.

White tried to correlate prices with the health care wages, hospital quality scores or market concentration in each region, but found no clear explanation for the differences from one city to the next. In Indianapolis, hospitals paid slightly lower wages than their peers in other cities and posted somewhat better quality scores.

But market concentration in Indianapolis was actually lower—meaning the market should have been more competitive—than in the 18 other cities.

“Together, these findings suggest that the ability of hospitals to command high prices rests on factors that are not easily discernible in quantitative measures of quality or market concentration,” White wrote. But the prices in some communities, he added, “are clearly out of line.”

 

ADVERTISEMENT

  • GM Healthcare Comment
    Certainly, these numbers are reflective of numerous influences here in central Indiana. However, if GM and the UAW were to aggressively address unit cost, the manner in which they purchase healthcare here locally and member responsibility, the future healthcare costs could be managed to very favorable inflationary trends. However, it does require, as it does with other employers, a different approach to purchasing healthcare here in central Indiana. Indiana employers, in general, have not been willing to do so.
  • Keep Us Posted!
    THIS IS VERY interesting, is this anything like price fixing?
    You should have mentioned and factored in wages and cost of living for employees as well as how raises have been withheld or minimized to the lower level employees.

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. Uh, sorry Johnnie, but you are incorrect. Despite the assertions by yourself and various defenders and captains, sports attendance is NOT off significantly at most sporting events in the US. Variances in attendance has been in the range of single digits, both + & - for years now. MLB has had most of its best overall attendance nubers in the last decade, and that trend has been consistent for most major sporting events. The number one issue cited by most fans when asked about attendance is the overall cost of attending. The presence of HD and big screen televisions in home doesn't even register, as a factor for not attending an event. VALUE in the product is the key, and apparently is something lacking in the current ICS. What other explanation is there when with what is routinely touted as the "best" racing on the planet, fans are staying away in DROVES. A "close" title battle into the last event at Fontana, with the "cars and stars" of the ICS, and who showed up? MAYBE 8K. Sorry, but HD TV isn't to blame for that kind of fan apathy.

  2. Do you need finance to establish your business ? Are you interested in getting a loan at 3% from our private company? If so please Email: suntrust_oil@blumail.org

  3. If she was worth the $ the public outcry over direct tv dropping them would have kept them on their dishes as we have seen with other companies. I too quit watching channel 13 after she showed up since I left channel 8 because of her all show rather than production results. When Randy on 8 corrected her she had a big head and incorrectly challenged his correction for pronunciation of a city. Other antics while she matures was too much for me with her very inaccurate forecasts. All the forecasters were predicting rain until Thursday except Chris. They predicted sunny on Thursday but instead of rain until Thursday upon which the sun would finally make it out in full glory Chris was right on the money just as I too predicted looking at the radar on weather.gov. One thing I love about Angela is the fear you can see in her every time it thunders in the winter. It far exceeds the entertainment value of her body language (high heel noise drags, depression, etc) when her forecasts are so incorrect. Her hair stands on end, you have to see it!!!

  4. Good Day, Apply For A Loan I am Mr Fernadez Antonio, a private Loan lender and a cooperate financial for real estate and any kinds of business financing. I also offer Loans to individuals, Firms and cooperate bodies at 3% interest rate We offer any kind of loans. email us via fernadezloaninvest@outlook.com LOAN APPLICATION FORM First name:......................... Middle name:......................... Last name:........................................ Date of birth (yyyy-mm-dd):....................... Gender:........................................... Marital status:................................... Total Amount Needed............................... Loan Duration.................................... Address:.......................................... City:............................................. State/province:................................... Zip/postal code:.................................. Country:.......................................... Phone:............................................ Fax:.............................................. Mobile/cellular:.................................. Monthly Income.................................... Occupation:....................................... Best Regard, Mr Fernadez Antonio.

  5. i will love to share my testimony to you all the people in world i got married to my husband about 2 year ago we start having problems at home like we stop sleeping on the same bed,fighting about little things he always comes home late at night,drinking too much and sleeping with other women out side i have never love any man in my life except him. he is the father of my child and i don't want to loose him because we have worked so hard together to become what we are and have today .few month ago he now decided to live me and the kid,being a single mother can be hard sometimes and so i have nobody to turn to and i was heart broken.i called my mom and explain every thing to her,my mother told me about DR.okoro how he helped her solve the problem between her and my dad i was surprise about it because they have been without each other for three and a half years and it was like a miracle how they came back to each other. i was directed to DR. okoro on his email:okorospell@gmail.com and explain everything to him,so he promise me not to worry that he will cast a spell and make things come back to how we where so much in love again and that it was another female spirit that was controlling my husband he told me that my problem will be solved within two days if i believe i said OK So he cast a spell for me and after two days my love came back asking me to forgive him i Am so happy now. so that why i decided to share my experience with every body that have such problem contact Dr okoro the great spell caster on his email addresses spellcasterforlove@outlook.com

ADVERTISEMENT