Payment Cut: If It's Truly That Bad, Hospitals Should Drop Government

Philip Betbeze, for HealthLeaders Media , April 23, 2010

Physician offices, in drips and drabs, are already doing it. The bottom line is as a hospital or health system leader, you have the power—and the responsibility—to keep your organization running as smoothly and as profitably as is reasonably possible, while still maintaining your mission to care for patients in the community. But that doesn't mean you have to deal with a payer that doesn't pay its weight.

Sure government, through its size, can attempt to strong-arm the entire industry. But until now, hospitals have been crying poverty and lobbying their representatives to pull CMS back on some of its proposed payment cuts. That's been pretty successful, but the nuclear option is to figure out a way to get out of the government's clutches.

Frankly, I don't see a lot of that happening. The cuts are something you'd rather not have to deal with as a leader, but the alternative is extremely risky. Still, I would expect that some hospital leaders might read the tea leaves and if they're operating a community hospital or network of community hospitals that's less dependent on government payers, that they would look for ways to exit that system long-term. That might mean they wouldn't be nonprofit anymore, but we are looking at bold strokes.

My point is that if the proposed cuts are truly as destructive as some would have you believe, there are options. It's just that we're not anywhere close to having anyone realistically try them. Still, look at Europe. There are lots of hospitals that don't take government reimbursement. They're called private hospitals. I wouldn't be surprised to see them sprout up here if the reimbursement system gets a lot worse. But we're not anywhere near that point now.

So maybe for now, it's time for hospitals to just deal with it.

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Philip Betbeze is senior leadership editor with HealthLeaders Media.

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