Modern Healthcare: Industry leaders share ideas, point fingers on limiting hospital prices

Hospital executives love to brag about all the progress they’re making cutting unnecessary costs out of their operations. As a reporter covering hospital finances, I hear it all the time. So-and-so system managed to get $200 million or $300 million slimmer in three years. So what does that mean for patients? How do hospitals’ cost-cutting efforts translate into lower prices?

I decided to explore the subject for this article. Think of it as one reporter’s quest to learn what hospitals and other sectors of healthcare view as their role in bringing hospital prices down, especially after rounds of aggressive cost-cutting. Spoiler alert: Almost no one shared practical steps that their own industries could take. Instead, there was a whole lot of blaming the other guys.

Gail Wilensky, an economist and senior fellow at the international health foundation Project HOPE, said my first mistake was trying to get straight answers from parties with personal stakes in the issue.

“That everybody says, ‘It’s the other guy that’s the problem,’ isn’t exactly a surprise,” said Wilensky, who served as administrator of the predecessor agency to the CMS for several years under President George H.W. Bush.

Here’s what leaders from major wings of the industry see as their role—or not at all their role, how dare you—in lowering hospital prices.

Asking hospital leaders what their own industry can do to lower prices is a bit like staring into the eye of a storm. Maybe that explains the expert-level deflection in their answers.

“Price is something that I think we’re overly focused on, when everything is a rate or a negotiated amount,” said Rick Pollack, who heads the country’s most powerful hospital lobbying group, the American Hospital Association.

As Pollack explained it, even if hospitals reduce their prices, insurers might be the ones who benefit, not the patients. Other hospital leaders expressed the same skepticism. They said even if hospitals did lower prices, the money saved might just pad insurers’ profits.

Centura Health in Centennial, Colo., is among the systems working to cut costs, with a goal of saving at least $350 million over a three-year period. But whether the system lowers prices isn’t up to Centura, said the system’s CEO, Peter Banko. Rather, prices hinge on conversations with health insurers and the employers with whom they have direct contracts.