Editor’s Note: Today’s contributed column is a response to yesterday’s column.
In the aftermath of the COVID-19 pandemic, hospitals across America and right here in our own community are engaged in critical negotiations with insurance companies. These discussions, often depicted as fierce battles, are essential for the health outcomes of patients in the Dayton region because they determine which hospitals and doctors are covered by your insurance plan. While this topic may seem distant to the average consumer, understanding why hospitals are fiercely negotiating with insurance companies post-COVID is crucial for the continued strength and resilience of our healthcare system.
Hospitals and insurance companies have a long-established relationship based on contracts that determine the cost of healthcare services. These contracts cover a wide range of factors, including the cost of a hospital stay, access to specialists, and the scope of services available to patients.
While this financing system was already complicated, the COVID-19 pandemic presented hospitals with unprecedented challenges and escalated the cost of providing care. Hospitals were suddenly thrust into the epicenter of a global health crisis, requiring them to swiftly secure personal protective equipment, train healthcare workers, secure additional staff, and expand facilities to accommodate the influx of COVID-19 patients. These measures came with significant financial burdens. In the post-COVID-19 landscape, hospitals now see patients who delayed care, routine procedures, and life-saving screenings. By the time our providers see patients who delayed care, these individuals are often sicker and require longer lengths of stay, resulting in higher costs for all.
In addition to healthcare specific pressures, hospitals are not immune to economic realities impacting all businesses. Industry-wide, hospitals are experiencing increases of nearly 21% for labor costs, nearly 20% for hospital drug costs, and nearly 19% for medical supply costs per patient since 2019, according to the American Hospital Association.
This is where the negotiations with insurance companies become crucial. Hospitals must negotiate with insurance companies to secure fair reimbursement rates for the services they provide in our local communities. When hospitals successfully negotiate fair reimbursement rates, it helps maintain reasonable healthcare costs for consumers.
Beyond contract disputes, the day-to-day business practices of the insurance industry continue to drive up the administrative cost of healthcare. A recent Crowe analysis in 2023 revealed that 1/3 of inpatient and outpatient claims submitted by providers to insurers went unpaid for more than 90 days. The American Hospital Association shared a recent poll that stated:
- 62% of patients in the U.S. say someone in their household has experienced at least one insurance coverage-related hurdle in the last two years.
- 43% say their health has gotten worse because of limited access to care.
As consumers, negotiations with insurance companies have a direct impact on your healthcare choices. The outcomes of negotiations determine which healthcare providers are included in your insurance network, ensuring that you have access to a wide range of medical services and specialists – right here in the Dayton region. If hospitals receive fair compensation for their services, it safeguards your ability to access the care you and your family need without facing prohibitive costs or adding undue burden to travel to other cities to receive in-network care.
For our communities, advocating for hospitals in their negotiations with insurance companies is essential for the long-term stability of our healthcare ecosystem. In addition to providing the medically necessary emergency, trauma, and specialty care services each community needs, hospitals are leaders in the local economy, employing nearly 45,000 individuals across the Dayton region. As critical components of our regional infrastructure, hospitals must be financially resilient to continue providing quality care and the services needed by our communities.
The COVID-19 pandemic changed much in American society but the need for strong, resilient hospitals and high-quality care has never been more important. Supporting hospitals in their efforts to ensure fair reimbursement rates will protect our healthcare choices and ensure the long-term stability of the Dayton region’s healthcare providers. Let’s stand behind our hospitals and healthcare providers, appreciating the vital role they play in our health and well-being, as they work to secure a healthier future for all of us.
Sarah Hackenbracht is the President & CEO of the Greater Dayton Area Hospital Association.