Effect of price transparency rule on U.S. hospital market

An analysis of hospital prices (commercial negotiated rates) among over 200 hospitals in the 10 largest metropolitan areas found that there is evidence that prices are converging. The top 25 percent of prices showed, on average, a 6.3 percent decrease in annualized real rate change* between December 2021 and June 2024. On the other hand, the bottom 25 percent of the analyzed market saw an increase of 3.4 percent in annualized real rate change.

Annualized real rate change of U.S. hospital commercial negotiated rates between 2021 and 2024, by top, middle, and bottom market segments

Characteristic	Average annualized real rate change
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Release date

October 2024

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Region

United States

Survey time period

December 2021 to June 2024

Special properties

Over 200 hospitals across the 10 largest U.S. metropolitan areas

Supplementary notes

*The source adds the following: Borrowing from the interquartile range approach, we focused on quartiles, but instead of analyzing the rate levels, we measured the average percentage rate change within each quartile over time. This approach standardizes the analysis across different rate levels and counters the bias introduced by inflation and inflation adjustments on rate-level dispersion measures.

We categorized each contracted rate into one of three market segments, comparing the December 2021 value to other rates for the same service and metro:
Top 25%: rates above the 75th percentile
Middle 50%: rates in the 26th to 75th percentile
Bottom 25%: rates at or below the 25th percentile

For each rate, we calculated the annualized real rate change (ARRC, colloquially “rate change”) between December 2021 and June 2024." See source for how ARRC is calculated.

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