Association Between Hospital Market Concentration and Costs of Laryngectomy

Key Points

Question  What is the association between hospital market concentration, charges, and costs of care for laryngectomy?

Findings  In this cross-sectional analysis, hospital market share and hospital volume were not associated with clinically meaningful differences in total charges for laryngectomy. Unconcentrated (competitive) markets were associated with higher costs relative to moderately concentrated and highly concentrated markets, while high-volume hospital care was associated with lower costs.

Meaning  Hospital competition is associated with higher costs of care for laryngectomy; the concentration of laryngectomies at hospitals that meet minimum volume thresholds may improve health care value.

Importance  High-volume hospital care for laryngectomy has been shown to be associated with reduced morbidity, mortality, and costs; however, most hospitals in the United States do not perform high volumes of laryngectomies. The influence of market competition on charges and costs for such patients has not been defined.

Objective  To examine the association between regional hospital market concentration, hospital charges, and costs for laryngectomy.

Design, Setting, and Participants  The Nationwide Inpatient Sample was used to identify 34 193 patients who underwent laryngectomy for a malignant laryngeal or hypopharyngeal neoplasm from January 1, 2003, to December 31, 2011. Hospital laryngectomy volume was modeled as a categorical variable. Hospital market concentration was evaluated using a variable-radius Herfindahl-Hirschman Index from the 2003, 2006, and 2009 Hospital Market Structure Files. Statistical analysis was performed from May 19 to August 15, 2018.

Main Outcomes and Measures  Multivariable generalized linear regression was used to evaluate associations between market concentration and total charges and costs for laryngectomy.

Results  Among the 34 193 patients (19.3% female and 80.7% male; mean age, 62.7 years [range, 20.0-96.0 years]), 69.2% of procedures were performed at hospitals in highly concentrated (noncompetitive) markets and 26.2% were performed at hospitals in unconcentrated (highly competitive) markets. Most high-volume hospitals (68.0%) were located in highly concentrated markets, followed by unconcentrated markets (32.0%). Market share and volume were not associated with significant differences in total charges. Unconcentrated markets were associated with 28% higher costs (95% CI, 8%-53%) relative to moderately concentrated and highly concentrated markets. High-volume hospitals were associated with 22% lower costs (95% CI, −36% to −5%).

Conclusions and Relevance  Competition among hospitals is associated with increased costs of care for laryngectomy. High-volume hospital care is associated with lower costs of care. These data suggest that hospital market consolidation of laryngectomy at centers able to meet minimum volume thresholds may improve health care value.

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