Pricier Hospitals Can Mean Higher Quality, With Big Caveat

With the cost of hospital-based services rising ever higher — and sometimes varying dramatically between different institutions — the concept of regulating prices has become a perennial political issue. However, a new study suggests that certain markets are much better suited for price regulation than others: namely, those where there is little hospital competition.

In those concentrated markets, higher hospital prices do not appear to lead to lower patient mortality, meaning cost isn’t correlated with quality, according to a new working paper published by the National Bureau of Economic Research (NBER). But in hospitals in less concentrated markets, pricier hospitals are indeed associated with increased health care quality — and as a result, patients are 47% less likely to die than if they attended lower-priced facilities.

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