Interhospital competition and hospital charges and costs for patients undergoing cranial neurosurgery

OBJECTIVE Research has documented significant growth in neurosurgical expenditures and practice consolidation. The authors evaluated the relationship between interhospital competition and inpatient charges or costs in patients undergoing cranial neurosurgery. METHODS The authors identified all admissions in 2006 and 2009 from the National Inpatient Sample. Admissions were classified into 5 subspecialties: cerebrovascular, tumor, CSF diversion, neurotrauma, or functional. Hospital-specific interhospital competition levels were quantified using the Herfindahl-Hirschman Index (HHI), an economic metric ranging continuously from 0 (significant competition) to 1 (monopoly). Inpatient charges (hospital billing) were multiplied with reported cost-to-charge ratios to calculate costs (actual resource use). Multivariate regressions were used to assess the association between HHI and inpatient charges or costs separately, controlling for 17 patient, hospital, severity, and economic factors. The reported β-coefficients reflect percentage changes in charges or costs (e.g., β-coefficient = 1.06 denotes a +6% change). All results correspond to a standardized -0.1 change in HHI (increase in competition). RESULTS In total, 472,938 nationwide admissions for cranial neurosurgery treated at 896 unique hospitals met inclusion criteria. Hospital HHIs ranged from 0.099 to 0.724 (mean 0.298 ± 0.105). Hospitals in more competitive markets had greater charge/cost markups (β-coefficient = 1.10, p < 0.001) and area wage indices (β-coefficient = 1.04, p < 0.001). Between 2006 and 2009, average neurosurgical charges and costs rose significantly ($62,098 to $77,812, p < 0.001; $21,385 to $22,389, p < 0.001, respectively). Increased interhospital competition was associated with greater charges for all admissions (β-coefficient = 1.07, p < 0.001) as well as cerebrovascular (β-coefficient = 1.08, p < 0.001), tumor (β-coefficient = 1.05, p = 0.039), CSF diversion (β-coefficient = 1.08, p < 0.001), neurotrauma (β-coefficient = 1.07, p < 0.001), and functional neurosurgery (β-coefficient = 1.11, p = 0.037) admissions. However, no significant associations were observed between HHI and costs, except for CSF diversion surgery (β-coefficient = 1.03, p = 0.021). Increased competition was not associated with important clinical outcomes, such as inpatient mortality, favorable discharge disposition, or complication rates, except for lower mortality for brain tumors (OR 0.78, p = 0.026), but was related to greater length of stay for all admissions (β-coefficient = 1.06, p < 0.001). For a sensitivity analysis adjusting for outcomes, all findings for charges and costs remained the same. CONCLUSIONS Hospitals in more competitive markets exhibited higher charges for admissions of patients undergoing an in-hospital cranial procedure. Despite this, interhospital competition was not associated with increased inpatient costs except for CSF diversion surgery. There was no corresponding improvement in outcomes with increased competition, with the exception of a potential survival benefit for brain tumor surgery.