The following is a summary of “Hospital Markup in Head and Neck Cancer Surgery in the US” published in the October 2022 issue of Otolaryngol Head Neck Surgery by Miller et al.

Healthcare reformers aim to standardize hospital payments and reduce the marked disparity in hospital prices. There is a lack of information regarding the factors contributing to the wide range of costs associated with head and neck surgeries. The goals of this study were to describe the range of hospital markups on head and neck cancer surgeries and to analyze the relationships between these markups and market concentration and hospitals’ for-profit status.  Patients with malignant upper aerodigestive tract neoplasms who underwent head and neck cancer surgery between 2001 and 2011 were identified in this cross-sectional investigation using the Nationwide Inpatient Sample. The markup percentage (prices charged as a percentage of total expenses) was analyzed using both a continuous and a categorical metric. 2000, 2003, 2006, and 2009 Hospital Market Structure files were used to calculate the Herfindahl-Hirschman Index, which measured the degree of concentration in the hospital market. The dates analyzed ranged from May 2019 until July 2019.

Associations between hospital and patient characteristics and hospital markup were analyzed using multivariate regression. Hospital market data was provided for 150,275 patients from 2001 to 2011 (mean standard deviation [SD] age, 61.8 [12.6] years; 104,974 [70.0%] male). There was a wide variety of markup ratios, from 0.8 to 8.7, with a mean of 2.8 (95% CI, 2.7-2.9). Markup ratios ranged from 1.8 (95% CI, 1.8-1.9) for hospitals in the lowest to 4.1 (95% CI, 4.0-4.2) for hospitals in the highest quartile. The hospitals with the highest markups were less likely to be high-volume facilities (21% versus 9.4%) or located in highly competitive marketplaces (64% versus 82.5%). Extreme markup hospitals had a higher incidence of postoperative complications (22.7% vs 17.1%). 

Private, for-profit hospitals (47.9%; 95% CI, 33.3%-64.2%), hospitals in the West (25.5%; 95% CI, 12.6%-39.8%), Hispanic race (9.8%; 95% CI, 4.4%-15.5%), past radiation therapy (5.3%; 95% CI, 1.3%-9.4%), comorbidity (3.5%; 95% CI, 1.7%-5.4%), and problems (2.8%; 95% CI, 0.3%-5.4%),  Concentration in the hospital market moderated the correlation between for-profit hospitals and markup, with larger markups in for-profit hospitals in moderately concentrated and concentrated (less competitive) markets. In this cross-sectional analysis, hospital markup for head and neck cancer surgery ranged widely, with some facilities charging four times more than their actual costs. The profitability of the hospitals was the primary determinant of the cost of surgical procedures. These findings indicate the need for more openness about hospital pricing to reduce price discrepancies.

Source: jamanetwork.com/journals/jamaotolaryngology/article-abstract/2797691