Richard L. Clarke, DHA, FHFMAPresident and CEO, HFMA
In June 2006, HFMA released Consumerism in Health Care, the latest report from the PATIENT FRIENDLY BILLING® project. For the most part, the reaction by healthcare leaders has been very positive. The actions taken in response to the report’s recommendations, however, appear to be developing very slowly.
As I talk to healthcare leaders, especially CEOs and CFOs, an obvious barrier to adopting the recommendations relates to the “law of unintended consequences.” For example, when attempting to rationalize pricing philosophies, what unintended negative impact will adjusting prices have on insurance contracts, Medicare payments, and overall profitability? Another issue is whether the “juice is worth the squeeze.” That is, does the public really care about pricing (especially for inpatient hospital services) because most insurance policies cover a majority of the cost of services, and one episode of care normally will consume all of the patient’s deductible. In fact, one insurance executive recently told an HFMA audience that price transparency – publicly posting prices – may lead to price increases because cost is often equated to quality. So it’s no wonder that healthcare leaders are skeptical.
But in next month’s hfm magazine cover story, Michael Nugent argues that lack of attention to pricing rationality has cost hospitals and some group practices market share to ambulatory centers and specialty providers. And I believe this pricing issue and the lack of transparency have reduced the level of trust by communities in their hospitals and medical practices. This lack of trust reduces the special standing that providers have in the community, which often results in challenges from the press, advocacy groups, labor unions, and government policy makers.
As Joe Fifer, FHFMA, CPA, HFMA’s Chairman, notes, courage in leadership is needed to deal with these issues. Healthcare financial leaders have a key role in shifting the mind-set of the leadership team in their organizations. Financial leaders must make the case that embracing consumerism – that is engaging consumers in their health and medical decisions - is a critical financial strategy. Building trust through rational pricing, price transparency and other recommendations from the Patient Friendly Billing project reduces threats to market share, tax exemption, charitable giving, union organizing activities, etc. And building trust can enhance the community’s engagement with the organization, thus enhancing revenue. These areas fall within the domain of the financial leader.
HFMA will continue to develop information, tools, and solutions that enable the financial leader to make a difference. Examples include the Patient Friendly Billing project noted above as well as articles such as the ones in hfm. With these resources, the only thing holding us back is the courage to make a difference.
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