New Study Shows State’s Hospital Prices One of the Lowest in Nation

Michigan Recorded Second Lowest Pricing in new RAND 3.0 Hospital Price Transparency Study

NOVI, MICHIGAN, September 18, 2020 – The Employers Forum of Indiana, a sister coalition to the Economic Alliance for Michigan (EAM), released a third in a series of hospital price transparency studies with the RAND Corporation. The RAND 3.0 study focused on claims data between 2016 to 2018 from 3,112 hospitals and 49 states – accounting for $33.8 billion in spending by private payers. 

The study demonstrated that Michigan was one of the leaders in the country for low hospital prices coming in at second lowest behind Arkansas of the 49 states reviewed in the study. The news was not all good as hospital prices in Michigan grew from 156% of Medicare in 2017 to 190% in 2018. 

“Michigan has many key market factors that contribute to lower hospital prices,” said Bret Jackson, president, EAM. “A relatively competitive hospital market, an aggressive insurance carrier, a strong Certificate of Need program, and a successful Medicaid expansion program all factor into Michigan having some of the lowest hospital prices for private payers in the country.”

Michigan was the lowest in the Great Lakes Region compared to Ohio (235%), Wisconsin (290%), Minnesota (297%), and Indiana (303%). Michigan fell well below the national average of 247% of what Medicare pays hospitals. 

“While private healthcare purchasers in Michigan are very pleased to see that we are very competitive in the national marketplace for hospital prices, we are very concerned about the steep price increase from 2017 to 2018,”

Jackson said. “The companies and workers in our state continue to feel the pain from ever increasing healthcare costs. This means companies can spend less money on wages, growth, and investment, while workers will have a harder time paying their medical bills and putting food on their tables.” 

The findings illustrate a wide variation in hospital facility and professional prices for the commercially insured population. The report also identifies the top ten most expensive health systems in each state and reports individual hospital prices alongside quality and safety measures. The research methods and national recruitment were a collaboration between the Employers’ Forum of Indiana, an employer-led health care coalition, and RAND Corporation. RAND researchers independently conducted all study analyses and wrote the final report. This study was funded by the Robert Wood Johnson Foundation and self-funded employers. RAND’s previous analysis published in 2019 examined hospital facility fees for inpatient and outpatient services in 25 states, and Michigan was noted to have the lowest hospital prices. This year’s study adds inpatient and outpatient professional fees and expands the analysis to 49 states and District of Columbia, the volume of data collected from the original 25 states, and the analysis of hospital quality and safety data. Similar to last year, this year’s report (RAND 3.0), an Excel spreadsheet, and interactive map noting all hospitals’ price and quality information can be found at www.employerPTP.org.

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