Spending on hospital (inpatient and outpatient) services accounts for more than half of per-person health care spending in the employer-sponsored insured (ESI) population. In 2022, hospital outpatient facility spending per person accounted for nearly a third of total per person spending. Per-person outpatient spending increased 18% from 2018 to 2022, which was driven by a 12% increase in prices and 6% increase in use.
To better understand spending on outpatient hospital facility services, this analysis looks at prices from 2012 to 2022 and whether those trends vary by several key hospital characteristics. We compare differences among the following hospital types: system-affiliated vs. independent, for-profit vs. nonprofit and rural vs. urban.
We use a weighted-average national outpatient price index—referred to as outpatient prices throughout this report—to examine price variation among a set of common same-day hospital-based outpatient services provided by short-term general acute care hospitals from 2012 to 2022.
The dashboard below displays historical outpatient prices by each hospital characteristic as well as the cumulative growth comparing each year to 2012. Each figure explores the overall trend and allows a more granular assessment of each trend by specific clinical category.
Throughout the report, we have highlighted how the overall trends are reflected in specific outpatient service categories. The highlighted services are those with the largest differences between the hospital characteristics that are being compared and those that are growing at the fastest rates.
System-Affiliated Hospitals had Higher Outpatient Prices
Next, we examined hospitals affiliated with a health system compared to those that operate independently. We used the American Hospital Association's definition to identify hospitals affiliated with a system. In this dashboard, hospitals who met the AHA's definition are labeled "system-affiliated," and hospitals who are not a part of a system are designated as "independent" hospitals.
In each year from 2012 to 2022, outpatient prices at system-affiliated hospitals were approximately 5-7% higher than independent hospitals. In 2012, system-affiliated hospital prices were 5% higher than independent hospital prices, but, by 2022, they were only 3.5% higher.
Emergency room evaluation and management (E&M) outpatient prices were the most different between system-affiliated and independent hospitals. In 2022, emergency room E&M outpatient prices averaged $1,106 among system-affiliated hospitals compared to $928 among independent hospitals. Emergency room E&M outpatient prices were approximately 20% to 30% higher among system-affiliated hospitals throughout the study period.
Outpatient prices at independent hospitals grew more quickly
Although prices were higher at system-affiliated hospitals, outpatient prices at independent hospitals increased more rapidly from 2012 to 2022. Compared to a 40% cumulative increase at system-affiliated hospitals over the same period, outpatient prices at independent hospitals grew 42% from 2012 to 2022.
Drug administration fees grew the fastest among both independent and system-affiliated hospitals. From 2012 to 2022, drug administration fees increased by 69% among both independent hospitals and system-affiliated hospitals.
Outpatient prices of emergency room E&M services among independent hospitals grew at the second fastest rate. In 2022, outpatient procedure prices at independent hospitals averaged $928, a 78% increase from 2012.
For-profit hospitals had higher outpatient prices than nonprofit hospitals
We first investigated price differences among for-profit and nonprofit hospitals. Nonprofit hospitals are exempt from paying most federal, state, and local taxes because of the "community benefit" they provide.
Between 2012 and 2022, outpatient prices among for-profit hospitals were higher every year than prices among nonprofit hospitals. The difference in outpatient prices was highest in 2012 when for-profit hospital prices were 10% greater than nonprofit hospitals. Outpatient hospital prices remained 5-7% higher than nonprofit hospitals throughout our study period. From 2012 to 2022, the average outpatient price at for-profit hospitals was $404, compared to $378.
The higher outpatient prices among for-profit hospitals were mainly driven by two service categories: 1) emergency room E&M and 2) imaging services. There were some service categories for which nonprofit hospitals had higher outpatient prices (e.g., outpatient procedures).
Outpatient prices at nonprofit hospitals grew faster than at for-profit hospitals
Even though for-profit hospitals demonstrated higher outpatient prices from 2012-2022, prices among nonprofit hospitals grew at a faster rate during the same period. By 2022, nonprofit hospital outpatient prices had grown cumulatively 41% since 2012 while for-profit hospital outpatient prices grew 37%. Nonprofit hospitals demonstrated a higher cumulative growth rate each year of our study period.
Among nonprofit hospitals, two service categories grew the fastest from 2012 to 2022: 1) outpatient prices of drug administration fees, and 2) emergency room E&M services. Nonprofit Drug administration fees increased by 73% from 2012 to 2022 and E&M grew 60%.
Outpatient prices at urban hospitals were higher than rural hospitals
Finally, we examined outpatient prices by hospitals located in rural areas compared to those based in urban areas, based on the USDA's Rural-Urban Commuting Area Codes. Outpatient prices were consistently higher at urban hospitals than at their rural counterparts. Throughout the study period, outpatient prices at urban hospitals were around 2.5% higher than those at rural hospitals from 2012 – 2022.
Drug administration fees and emergency room E&M services were the service categories with the largest difference between urban and rural hospitals. E&M services averaged $1,117 among urban hospitals in 2022 and $845 among rural hospitals. Drug administration fees among urban hospitals ranged from 25% to 35% higher than rural hospitals each year.
There were some service categories, however, for which outpatient prices in rural hospitals are higher. For example, outpatient prices of general laboratory services, imaging, and treatment services were higher among rural hospitals each year of the study period.
Outpatient prices at rural hospitals grew slightly faster than at urban hospitals
The cumulative growth of outpatient prices at rural hospitals was slightly faster than urban hospitals, growing at 43% and 41%, respectively, from 2012 to 2022. Rural hospitals exhibited higher cumulative growth every year. During this period, rural hospitals were more likely to be acquired by larger health systems, which could be contributing to these trends.
Outpatient prices of emergency room E&M services among rural hospitals grew the fastest from 2012 to 2022, increasing 109% from 2012 to 2022. They grew by 70% among urban hospitals, in comparison. In 2012, Emergency room E&M prices were 35% higher, on average, at urban hospitals than rural hospitals. Rapid growth meant that they were 25% higher in 2022. Drug administration fees grew the second fastest, 83%, from 2012 to 2022 among rural hospitals while urban hospital drug administration outpatient prices grew 69%.
This analysis found that outpatient hospital prices differed by some key hospital characteristics. Of those we studied, we found the biggest difference in prices between for-profit and nonprofit hospitals. On average, outpatient prices among for-profit hospitals were 7 -10 % higher than nonprofit hospitals. System-affiliated hospitals' outpatient prices were 5-7% higher than independent hospitals on average, and urban hospitals exhibited slightly higher prices (3-5%) than rural hospitals. Our analysis suggests that emergency room E&M services and drug administration fees were the source of many of the differences we observe over the period.
In previous HCCI work, we found similar differences among inpatient prices trends between system-affiliated and independent hospitals and urban and rural hospitals. Unlike our finding for outpatient prices, the earlier analysis showed inpatient hospital prices were higher among nonprofit hospitals compared to for-profit hospitals.
The set of ambulatory hospital-based services included in this analysis generally have lower prices than inpatient services, but they also are used more frequently. Though inpatient and outpatient prices have some trends in common (i.e., higher prices among system-affiliated hospitals), these results suggest that public and private policymakers may need to deploy different approaches to address outpatient hospital prices than they use for inpatient prices. Establishing trends in outpatient prices can aid policymakers in identifying targeted solutions to temper the rapid increase in health care spending.
Methodology:
We identified outpatient facility claims between 2012 and 2022. We limited our data to hospital outpatient services rendered at short-term general acute care hospitals, including Critical Access Hospitals. We exclude outpatient services provided at other facilities such as skilled nursing facilities (SNFs) and ambulatory surgical centers (ASCs). We excluded claims where the health plan was not the primary payer and allowed amounts less than $1.
We calculated a hospital-level outpatient price index as the hospital's price for a basket of services from each BETOS category. For inclusion in our market basket of services, we selected the top 5 procedure codes for use and spending in each BETOS category. Additionally, each procedure code was required to have at least one claim for each year between 2012 and 2022. A balanced all-years requirement allows for the outpatient price index to meaningfully compare price trend across years. A limitation of this approach is the inability to measure service mix change during this period e.g., introduction of biosimilars around 2017. Each hospital-year outpatient price index is the composite regression-based outpatient price, which includes all services in outpatient market basket. To control for case-mix, patient demographics, and contemporaneous trends, we calculated an outpatient price for each hospital-year. The regression specification follows on existing literature (Cooper et al. 2019; Gaynor and Vogt, 2003; and Gowrisankaran et al. 2015). See downloadable data.