Association of Hospital Market Concentration With Costs of Complex Hepatopancreaticobiliary Surgery

Importance: Trade-offs involved with market competition, overall costs to payers and consumers, and quality of care have not been well defined. Less competition within any given market may enable provider-driven increases in charges.

Objective: To examine the association between regional hospital market concentration and hospital charges for hepatopancreaticobiliary surgical procedures.

Design, Setting, And Participants: This study included all patients undergoing hepatic or pancreatic resection in the Nationwide Inpatient Sample from January 1, 2003, through December 31, 2011. Hospital market concentration was assessed using a variable-radius Herfindahl-Hirschman Index (HHI) in the 2003, 2006, and 2009 Hospital Market Structure files. Data were analyzed from November 19, 2016, through March 2, 2017.

Interventions: Hepatic or pancreatic resection.

Main Outcomes And Measures: Multivariable mixed-effects log-linear models were constructed to determine the association between HHI and total costs and charges for hepatic or pancreatic resection.

Results: Weighted totals of 38 711 patients undergoing pancreatic resection (50.8% men and 49.2% women; median age, 65 years [interquartile range, 55-73 years]) and 52 284 patients undergoing hepatic resection (46.8% men and 53.2% women; median age, 59 years [interquartile range, 49-69 years]) were identified. Higher institutional volume was associated with lower cost of pancreatic resection (-5.4%; 95% CI, -10.0% to -0.5%; P = .03) and higher cost of hepatic resection (13.4%; 95% CI, 8.2% to 18.8%; P < .001). For pancreatic resections, costs were 5.5% higher (95% CI, 0.1% to 11.1%; P = .047) in unconcentrated hospital markets relative to moderately concentrated markets, although overall charges were 8.3% lower (95% CI, -14.0% to -2.3%; P = .008) in highly concentrated markets. For hepatic resections, hospitals in highly concentrated markets had 8.4% lower costs (95% CI, -13.0% to -3.6%; P = .001) compared with those in unconcentrated markets and charges that were 13.4% lower (95% CI, -19.3% to -7.1%; P < .001) compared with moderately concentrated markets and 10.5% lower (95% CI, -16.2% to -4.4%; P = .001) compared with unconcentrated markets.

Conclusions And Relevance: Higher market concentration was associated with lower overall charges and lower costs of pancreatic and hepatic surgery. For complex, highly specialized procedures, hospital market consolidation may represent the best value proposition: better quality of care with lower costs.