On October 15, 2021, the New York City Council Committees on Hospitals and Health held a joint hearing on the impact of hospital costs on access to care. NYSHealth’s Director of Policy and Research, Mark Zezza, testified before the hearing to share relevant findings on health care costs and price variation in New York.
Thank you, Chairperson Rivera and Chairperson Levine and members of the Committees, for the opportunity to testify before you to discuss hospital prices and health care price variation.
I am Mark Zezza, Director of Policy and Research at the New York State Health Foundation.
The Foundation is a private, independent, charitable organization that operates statewide and has the mission of improving the health of all New Yorkers.
The Foundation believes that information transparency is a gateway to improving affordability, quality, and competition in the health care system.
New York State has been consistently shown to have high health care spending in comparison to the rest of the country, with the growth in prices being the main driver of spending levels. Historically, there has been little transparency in prices. When prices are revealed, we see a great deal of unwarranted variation.
In a recent publication, we analyzed the variation in prices for births in New York City from 2015 through 2017. We found that:
- There is wide variation in prices for childbirth across New York City boroughs. For example, in 2017, there was a 30% difference in median prices for vaginal deliveries between Brooklyn and the Bronx. In Brooklyn, the median price was about $12,700, compared to the Bronx, where it was about $16,600.
- We also see substantial variation within boroughs.
- Of course, you expect to see some variation in prices—sometimes there are patient differences and complications that require more intensive and costly health care. But the price variation we’re seeing is well in excess of what we’d expect to see based on those types of differences.
And we know from other research that variation in prices is generally not correlated with the quality of care—not only for childbirth, but also for services like radiology exams, office visits, and surgeries.
In 2016, the Foundation funded a study by Gorman Actuarial to investigate the main drivers of price variation within the hospital industry. Gorman worked with the State to obtain price data, including the actual negotiated prices, as well as copies of contract provisions between hospitals and health plans.
The analysis focused on several markets throughout New York State, including in the downstate area of New York City, plus Suffolk and Westchester Counties.
- The study found that the highest-priced hospitals are 50% to 170% more expensive than the lowest-priced hospitals in the same region.
- And as we’ve seen in other research, this study found that hospitals with higher prices do not necessarily have higher quality.
- Rather than quality, the primary factor driving high prices is market share. Hospitals that are part of a hospital system with a large market share are generally higher-priced as a result of the power of that hospital system in contract negotiations.
- The report also found certain contract provisions that impede health care competition and transparency for consumers. These include anti-steering language which can limit the information available about high-quality, lower-priced providers. These contract terms can compromise a patient’s ability to seek out more affordable or better care options.
In conclusion, the lack of transparency combined with high and variable prices is anti-consumer. It can lead to higher premiums, health care related taxes, and even higher prices for non-health care related goods. Excessively high prices, especially when they come as a surprise to a patient, can also undermine the patient-provider relationship. The lack of transparency also undermines the ability of employers, patients, and other health care purchasers to shop for more efficient health care.
More information about both of the studies discussed are on our website, www.nyshealth.org. Thank you for your attention to this important topic; I’m happy to answer any questions you may have.
Watch a video of the hearing (Dr. Zezza’s testimony begins at 03:02:51).