The National Institute of Health Care Management (NIHCM) has awarded its 25th Annual Research Award to a four-person team that includes Wharton School Health Care Management PhD student and LDI Associate Fellow Stuart Craig.

Stuart and Zack Cooper, PhD, of Yale, Martin Gaynor, PhD, of Carnegie Mellon, and John Van Reenen, MSc, PhD, of MIT were selected for their paper, “The Price Ain’t Right? Hospital Prices and Health Spending on the Privately Insured” published in the September, 2018 edition of Harvard University’s Quarterly Journal of Economics. The winners will be honored at a Washington, D.C. banquet next month and receive a $20,000 prize.

“Over the last 25 years our Research Award finalists have generated tremendously important insights around challenges and solutions in our health care system, and this year was no exception,” said NIHCM CEO Nancy Chockley.

Craig earned his BS in Industrial and Labor Relations at Cornell, worked for five years as a statistician in the Economics Department of Yale University, and has been studying for his PhD at the Wharton School since 2015.

Major findings

The team’s study used newly accessible private coverage claims from three of the five largest U.S. health insurers — Aetna, Humana and UnitedHealthcare — to analyze prices paid for health services received between 2007 and 2011 by 27% of U.S. patients with employer-sponsored insurance coverage.

Among its findings were that:

• In 366 mergers and acquisitions of health care systems during that period, prices increased more than 6% when the merging hospitals were 5 miles of less apart, but not when hospitals were more than 25 miles apart.
• Prices at monopoly hospitals were 12% higher than those in markets with four or more rivals.
• Risk-adjusted spending for privately insured individuals age 18 to 64 varied by a factor of more than three across all 306 U.S. hospital referral regions (HHRs) compared to Medicare spending that varied by a factor of 0.044 across the same HHRs.
• Prices for the same procedures for the privately insured vary substantially across regions, across hospitals within regions, and even within hospitals.

Judges impressed

“The judges were impressed with the national reach of this work and its impact on transforming the conversation about health care costs and highlighting the importance of effective antitrust enforcement,” said an NIHCM statement.

NIHCM is a non-profit organization whose Board of Directors includes the CEOs of health plans covering more than 40% of privately insured Americans; its Advisory Board consists of a group of academics, physicians and former government leaders affiliated with both parties. The organization’s goal is to promote evidence-based policymaking and promote collaboration across the field of health care.