Dare we say we have . . . good news?
Could it be that payers are finally acknowledging how expensive it is to operate a hospital?
According to a recent article in Fierce Healthcare, it appears that way. Some health systems are indicating that payers may be willing to agree to reimbursement rates that support hospital sustainability next year. Rather late, but we’ll take it!
“Speaking to investors during earnings calls this past week, the hospital chains each reported limited non-COVID volumes, supply chain interruptions and pricey contract labor rates that are expected to persist through the end of the year,” reports Fierce Healthcare. But here’s the good news: Sam Hazen, CEO of hospital company HCA, says he’s seeing “some early success and recognition by the payers” that the financial situation is pretty dire.
If you need a recap on how all this works, we’ve got you covered: Periodically, typically near the end of a contract term, health insurance companies and health systems meet at a metaphorical negotiation table to determine just how much the insurer will pay back the hospital for the care that it provides its members (AKA patients) — this figure is known as a reimbursement rate, and the process is called a contract negotiation.
This used to happen without much fuss. But as payors have become more cutthroat, they have increasingly tried to push hospitals into subpar contracts, and sometimes the two parties can’t come to an agreement, which results in the hospital going “out of network” with said payor. Ultimately, that reduces access for patients.
Need we be reminded that it’s been an especially trying few years for health systems as they attempt to recover from COVID-19, deal with staffing shortages and inflation in supply costs, while insurers saw record profits.
In other words, hospitals need fair reimbursement rates now more than ever. Because if hospitals don’t bring in enough reimbursement to offset how much they’re spending on charity care, supplies and staff, they simply will cease to operate. We’re heartened by what hospitals say they’re hearing – but we won’t hold our breath till the ink is dry.