Abstract
This cohort study assesses whether negotiated prices for procedural and imaging services differ at independent vs system-affiliated rural hospitals.
Introduction
Nearly one-third of rural hospitals are at risk of closing, largely due to financial challenges.1 Emerging data suggest that health system affiliation is associated with higher negotiated prices for services.2,3 For rural hospitals, system affiliation is associated with improved financial performance, margins, and inpatient and outpatient prices broadly.4,5,6 However, most efforts have emphasized only critical access hospitals, a subset of rural hospitals, and have not evaluated service-specific price differences. We sought to assess whether negotiated prices for procedural and imaging services differ at independent vs system-affiliated rural hospitals.
Methods
In this cohort study, we collected commercially negotiated prices on December 17, 2024, from Turquoise Health, a database that aggregates price data daily reported for commercial insurance plans based on publicly available data. We evaluated prices for a combination of high-margin and high-volume procedures and imaging studies that hospitals are required to report in accordance with price transparency policies. We linked negotiated prices to publicly available Healthcare Cost Report Information System (HCRIS) data from Centers for Medicare & Medicaid Services using the Hospital Identification Number to associate hospital information with price data. Using HCRIS data, we evaluated hospital characteristics and delineated rural hospitals based on US Census Designation of Core-Based Statistical Areas (CBSA). Hospitals were considered rural if they were in a rural or micropolitan CBSA. We identified independent vs system-affiliated rural hospitals by using the 2021 American Hospital Association Annual Survey.
We used 1% winsorization by service and adjusted for critical access hospital status, hospital ownership status, annual admissions, and state fixed effects to account for possible appropriate variations in negotiated prices. We used equality of proportion tests and t tests where appropriate when comparing hospital characteristics and prices at independent vs system-affiliated rural hospitals. All statistical tests were 2-sided, and P < .05 was used as our statistical significance threshold. The statistical analysis was performed from December 2024 to January 2025, using Stata Statistical Software, version 16.0. This cohort study adhered to the STROBE reporting guideline and was deemed exempt from review and informed consent by the University of Michigan institutional review board because it does not use any patient information; secondary data are used in our analysis.
Results
There were 1063 rural hospitals (596 independent) and 426 557 negotiated prices identified. Independent and system-affiliated rural hospitals had similar bed capacity but different geographic distributions. Additionally, independent hospitals were more likely to be for profit (57.7% vs 23.1%; P < .001) and be a critical access hospital (80.7% vs 73.9%; P = .008) (Table 1). Of the 14 procedures included, 13 had higher adjusted negotiated prices at system-affiliated rural hospitals compared with their independent counterparts (Table 2). For a common procedure (eg, cholecystectomy), negotiated prices were 30.8% lower at independent rural hospitals ($5356 vs $7006; difference, $1650; P < .001). Similarly, all 12 imaging procedures had higher adjusted negotiated prices at system-affiliated rural hospitals (Table 2).
Table 1. Hospital Characteristics at Independent vs System-Affiliated Rural Hospitals.
| Characteristic | Hospitals, No. (%) | P value | |
|---|---|---|---|
| Independent | System affiliated | ||
| No. of hospitals | 596 | 467 | |
| Census region | |||
| Northeast | 25 (4.2) | 28 (6.0) | .18 |
| South | 208 (34.9) | 179 (38.3) | .25 |
| Midwest | 234 (39.3) | 217 (46.5) | .02 |
| West | 129 (21.6) | 43 (9.2) | <.001 |
| No. of beds | |||
| 1-100 | 199 (33.4) | 151 (32.3) | .72 |
| 101-300 | 324 (54.4) | 251 (53.7) | .84 |
| ≥301 | 73 (12.2) | 65 (13.9) | .42 |
| Ownership | |||
| For profit | 344 (57.7) | 108 (23.1) | <.001 |
| Not for profit | 224 (37.6) | 313 (67.0) | <.001 |
| Governmental, nonfederal | 28 (4.7) | 46 (9.9) | .001 |
| Critical access hospital | |||
| No | 115 (19.3) | 122 (26.1) | .008 |
| Yes | 481 (80.7) | 345 (73.9) | .008 |
| Annual admissions, No. | |||
| 0-500 | 367 (61.6) | 242 (51.8) | .001 |
| 501-1000 | 149 (25.0) | 113 (24.2) | .76 |
| >1000 | 80 (13.4) | 112 (24.0) | <.001 |
Table 2. Differences in Adjusted Price-Negotiated Rates at Independent vs System-Affiliated Rural Hospitalsa.
| Service | No. of negotiated prices | Price, mean (95% CI), USD | Difference (%), USD | P value | |
|---|---|---|---|---|---|
| Independent rural hospitals | System-affiliated rural hospitals | ||||
| Procedures | |||||
| Benign uterine and adnexa procedures | 5843 | 16 219 (16 012-16 426) | 20 441 (19 717-21 165) | 4222 (26.0) | <.001 |
| Breast excision | 11 188 | 2688 (2650-2727) | 3127 (3017-3237) | 439 (16.3) | <.001 |
| Cardiac valve procedure with cardiac catheterization | 4954 | 125 688 (123 968-127 409) | 168 378 (161 666-175 091) | 42 690 (34.0) | <.001 |
| Cataract removal | 5536 | 3998 (3937-4060) | 4833 (4660-5005) | 835 (20.9) | <.001 |
| Cervical spinal fusion | 5063 | 30 745 (30 285-31 205) | 41 735 (40 034-43 435) | 10 990 (35.7) | <.001 |
| Cholecystectomy | 9689 | 5356 (5264-5448) | 7006 (6767-7245) | 1650 (30.8) | <.001 |
| Colonoscopy | 14 390 | 1739 (1719-1758) | 2020 (1970-2071) | 281 (16.2) | <.001 |
| Diagnostic heart catheterization | 4162 | 11 318 (11 149-11 487) | 15 028 (14 235-15 820) | 3710 (32.8) | <.001 |
| Esophagogastroduodenoscopy | 15 326 | 1588 (1569-1606) | 1928 (1878-1978) | 340 (21.4) | <.001 |
| Hip or knee replacement | 6834 | 24 981 (24 681-25 281) | 29 979 (28 980-30 979) | 4998 (20.0) | <.001 |
| Inguinal hernia repair | 8992 | 3747 (3677-3818) | 4670 (4490-4850) | 923 (24.6) | <.001 |
| Noncervical spinal fusion | 5568 | 44 777 (44 153-45 401) | 57 358 (55 046-59 669) | 12 581 (28.1) | <.001 |
| Prostatectomy | 2065 | 14 365 (14 111-14 618) | 13 880 (12 711-15 049) | −485 (−3.4) | .42 |
| Tonsil removal (patient <12 y) | 4620 | 4148 (4044-4253) | 5990 (5704-6276) | 1842 (44.4) | <.001 |
| Imaging studies | |||||
| Abdomen and pelvis CT scan with contrast | 25 687 | 2605 (2586-2624) | 2891 (2844-2938) | 286 (11.0) | <.001 |
| Abdominal ultrasound of pregnant uterus, 1st trimester | 21 148 | 541 (537-545) | 620 (610-630) | 79 (14.6) | <.001 |
| Bilateral mammography | 21 288 | 379 (376-382) | 438 (432-445) | 59 (15.6) | <.001 |
| Brain MRI with contrast | 21 672 | 2790 (2769-2810) | 3198 (3146-3249) | 408 (14.6) | <.001 |
| Complete abdominal ultrasound | 22 762 | 654 (649-659) | 735 (722-748) | 81 (12.3) | <.001 |
| 4-View lower back x-ray | 23 559 | 394 (391-398) | 430 (422-438) | 36 (9.0) | <.001 |
| Head CT without contrast | 24 465 | 1190 (1181-1199) | 1282 (1259-1304) | 92 (7.7) | <.001 |
| Lower extremity MRI | 43 248 | 1933 (1923-1944) | 2291 (2263-2319) | 358 (18.5) | <.001 |
| Pelvis CT scan with contrast | 22 280 | 1627 (1615-1639) | 1805 (1775-1834) | 178 (10.9) | <.001 |
| Screening mammogram | 40 687 | 289 (287-290) | 332 (328-336) | 43 (14.9) | <.001 |
| Transvaginal ultrasound | 24 589 | 494 (490-497) | 538 (529546) | 44 (8.9) | <.001 |
| Unilateral diagnostic mammography | 30 942 | 300 (298-302) | 349 (345-354) | 49 (16.5) | <.001 |
| Total | 426 557 | NA | NA | NA | NA |
Abbreviations: CT, computed tomography; MRI, magnetic resonance imaging; NA, not applicable; USD, US dollars.
Adjusted for critical access hospital status, hospital ownership status, annual admissions, and state fixed effects.
Discussion
This study evaluating 426 557 negotiated prices found that independent rural hospitals had lower negotiated prices for procedural and imaging services than their system-affiliated counterparts. These data suggest 2 possible strategies to support financially struggling independent rural hospitals. First, rural hospitals could consider pursuing a health system affiliation that may give them better negotiating power and may lead to higher reimbursement, although there can be adverse consequences for system affiliation.5 Second, policymakers could intervene to ensure fair, equitable reimbursement for rural hospitals, especially in the context of increasing health care spending.
These findings should be interpreted in the context of their limitations. Data regarding system affiliation are from 2021, whereas pricing data are through 2024. Some hospitals may have since become affiliated, but this would bias our findings toward the null. Additionally, there may be appropriate sources of variation in negotiated prices. However, we adjusted for potential factors that may explain such variation. The rates provided may be vulnerable to reporting bias. However, compliance with these reports is federally mandated, and these data are increasingly being used to evaluate hospital prices.2,3
Data Sharing Statement
References
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Supplementary Materials
Data Sharing Statement