Editor's Corner

So, a new study released this week concluded that a third of what patients pay in goes straight back into claims and billing costs (at least within hospitals). While it certainly could be lowered by electronic data exchange, this doesn't strike me as an extraordinarily high number, given the realities of having to submit and resubmit claims to dozens of divergent health plans.

It's worth noting, however, that consumers consider this to be way out of line. The study found that consumers would be extremely upset if they knew administrative costs rose much above 10 percent. While their expectations may not be completely fair, we can't just discount them. After all, as CDHPs get more popular and they carry more of the bill out-of-pocket, patients will definitely make themselves heard on issues like these!

So what can hospitals do? Why, communicate, of course. They can use vehicles like a newsletter or open letter to offer a clear and honest explanation of how claims administration and other operational costs play into pricing. It doesn't have to be full of accounting jargon--in fact, it shouldn't be--but it should offer enough financial detail to satisfy an educated adult.

There's no time to waste. After all, if CDHPs and other high-deductible plans become a predominant force, consumers will be forced into the unfamiliar role of pricing interpreter. They'll be more concerned and defensive, and less willing to listen to explanations of, say, why the cost of submitting claims manually is so high. And they really won't be nice about it if they feel your overhead figures are exaggerated or excessive.

Ultimately, of course, both hospitals and consumers will be happiest if these overhead costs shrink substantially, rather than having to be explained away. But in the mean time, it makes a lot of sense to help patients understand (and be tolerant of) the way things are today. - Anne

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