If a hospital knows what another one is getting, the hospital can leverage that information when its negotiations come due. Many organizations have a general idea of how well they do on commercial reimbursement related to their peers, and the ones that are doing much better than their competitors—for whatever reason—would seem less willing to share that information even if they could.
But small organizations often say that their size, not their cost profile, is what prevents them from getting their due in negotiations with commercial insurers—despite their lower costs and, in some cases, higher quality. Through transparency of prices, they could better make that case.
One who resents this paradox is Steven Sonenreich, president and CEO of Mount Sinai Medical Center in Miami Beach, Fla., and not just because his revenues and margin are at stake through reimbursement that he says is on the low side versus his competitors because of their greater market power. He's also concerned in his role as a large employer in a state where large employers, who can sometimes serve as a lid on premium increases, are scarce.
"We wear one hat as CEOs of mission-driven large healthcare organizations, but under another hat, we're also employers," says the CEO of the 672-licensed-bed organization with more than 3,500 employees, adding that one of the greatest challenges any employer has is managing the expense of health insurance for its own employees.
"I have a little more insight into the management of health insurance premiums as an employer than CEOs who are not in healthcare, but we've all seen the cost of insurance rising at such an alarming rate, and that has also caused the expense to the employer and the employee to rise at a dramatic rate. That's of great concern to me as an employer."
Sonenreich claims that the rising cost of insurance is largely tied to consolidation and the market power of bigger, but not necessarily higher-quality, organizations. He says the lion's share of reimbursement from commercial payers goes to those organizations.
"What's occurred is we have many large hospital systems that are using size to leverage insurance companies for much higher rates," he says. "Many institutions would like you to believe consolidation is to improve operations; it's really to drive pricing leverage."
He offers anecdotal examples of this. He says for two Mount Sinai employees who were hospitalized at neighboring large system hospitals for emergency care needs, the price Mount Sinai paid was 30%–40% higher than if those people had been able to get to Mount Sinai.