Regional Hospital Input Price Indexes

This paper describes the development of regional hospital input price indexes that is consistent with the general methodology used for the National Hospital Input Price Index. The feasibility of developing regional indexes was investigated because individuals inquired whether different regions experienced different rates of increase in hospital input prices. The regional indexes incorporate variations in cost-share weights (the amount an expense category contributes to total spending) associated with hospital type and location, and variations in the rate of input price increases for various regions. We found that between 1972 and 1979 none of the regional price indexes increased at average annual rates significantly different from the national rate. For the more recent period 1977 through 1979, the increase in one Census Region was significantly below the national rate. Further analyses indicated that variations in cost-share weights for various types of hospitals produced no substantial variations in the regional price indexes relative to the national index. We consider these findings preliminary because of limitations in the availability of current, relevant, and reliable data, especially for local area wage rate increases.