They say knowledge is power. To that end, we recently hosted a National Hospital Price Transparency Conference in Indianapolis to arm employers with necessary information on hospital prices in their pursuit of attaining affordable health care.
Hospital services account for a large percentage of employer health expenses. These costs are rising rapidly, compromising employers’ ability to increase salaries for their employees and further grow their businesses. There is no simple way for employers and employees to compare prices from one hospital to another. They discover what they owe when they receive a bill, after services have been provided.
To help employers understand how hospital services are contributing to rising health care costs, the Employers’ Forum of Indiana commissioned RAND Corp. to conduct a hospital price report. More than a dozen Indiana employers offered three years of their claims data to be analyzed by RAND.
The freely available report published in 2017 noted what employers paid as a percentage of what Medicare paid for the same services at 120 Indiana hospitals. The analysis found Indiana employers paid, on average, nearly three times what Medicare paid for the exact same set of services, with some hospitals getting paid six times more.
While we understood Indiana hospital prices to be much higher than those paid by Medicare, we wished to understand how Indiana hospital prices for employers compared with those of other states. Thus, we decided to update the study, partnering with RAND again, and invited other states to participate.
The preliminary results of this updated study, which included employer claims data from 20 states, was shared at our recent conference. This analysis included more than 1,200 hospitals and over $12 billion in health care spending. The findings were shocking:
◗ Of the 20 states analyzed, Indiana employers are paying the most for total hospital (inpatient plus outpatient) services.
◗ The average operating profit margin for Indiana hospitals is five times higher than the national hospital average.
Indiana hospital prices are not sustainable. They are compromising the ability of businesses to compete in a global economy, harming the ability of municipalities to adequately provide services for their citizens, and preventing employees from having funds to spend on other aspects of their lives.
The Forum aims to help health care purchasers get the best value (best quality at the best price) for their health care dollar. Price transparency is foundational to having an honest discussion. We look forward to collectively working with our hospital and health plan partners to turn this boat around.
The final RAND National Hospital Price report will include an interactive tool to make reviewing the analysis of employer claims data from 22 states easier. Relative hospital prices paid will be reported in these states by hospital name. This report will be freely available to the public and published on the RAND website in May.
At the end of the day, this is just a report. A path to affordability will become reality when stakeholders partner and do something with the information.•
Sachdev is president and CEO of the Employers’ Forum of Indiana