Differential Pricing for Medical Procedures and its Impact on Patient Outcomes

In the United States, healthcare spending significantly surpasses that of other developed nations, yet improvements in patient outcomes remain inconsistent. While the Veblen effect suggests that higher prices often signal superior quality in luxury markets, this relationship does not reliably apply to healthcare, where high costs may reflect inefficiencies rather than better care. This research studies whether premium healthcare pricing correlates with superior patient results or if it is just a mechanism of price gouging. It is predicted that pricing of a medical procedure is not a good indicator of the quality of service delivered. The analysis of the Hospital Readmissions Reduction Program (HRRP) interaction with adjusted price to impact quality proxies such as readmission and mortality rate is underway. The analysis is run on 2011-2014 National Readmission Database (NRD) patient level cross-sectional data, provided by Healthcare Cost & Utilization Project. One of the correlational models being utilized is the Mixed Effects Logistic Regression Model. Currently this model demonstrated that increase in adjusted price seems to decrease the 30- day readmission rate. However, the effect is small in magnitude. Hip and knee replacement were more strongly predicted by variables such as age, gender, elective procedure status, and severity. These findings start to explore the complex relationship between price, readmission rate, and other key variables. This agrees with certain aspects of current literature, but more nuanced and robust analysis is to be generated.