Tag Archives: business of health care

Discount drug pricing: Cutting through the controversy

Image by Bill Brooks via flickr.

Image by Bill Brooks via flickr.

Independent journalist Lola Butcher reports that debate about the government’s 340B Drug Pricing Program continues to build as the program expands.

“Like all good controversies, this one has enthusiastic advocates and wild-eyed opponents, and it’s easy to get snagged by the passion of the partisans,” she writes in a new tip sheet. Continue reading

N.C. hospital garnishes patient tax refunds to collect debts

Joseph Neff, reporting for North Carolina’s News & Observer, explains how UNC Health Care is taking advantage of “a little-known law, the Set Off Debt Collection Act, that allows state and local agencies to collect debts by seizing state tax returns and lottery winnings.

UNC is the only hospital in the state that qualifies to use the service and is, in fact, legally compelled to do so.

Last year, UNC Hospitals collected $5.7 million, while UNC Physicians and Associates collected $2 million. Together, that accounted for 11 percent of the $72 million of set off debt collected for all state and local agencies that year

Standalone emergency rooms generate profit, controversy

When a local hospital opened up a free-standing emergency room in a part of the county traditionally served by its competitors, The Palm Beach Post‘s Bill DiPaolo took a look at the economic motivations behind this move and similar ones around the country.

Standalone emergency rooms, which offer more options than urgent care facilities but still must transfer patients to full-size hospitals for more serious treatment, started cropping up in rural areas about two decades ago, DiPaolo writes. They are attractive to hospitals because they allow them to expand their coverage area at a fraction of the cost of building a full new facility. There are six in Florida alone, partly because hospitals can build them without acquiring the state “certificate of need” required for the construction of a full hospital.

The hospital that opened the ER in Palm Beach County says it is filling a local need and increasing its competitiveness, but its rivals claim the new facility could bring higher costs — because patients may be taken there instead of to urgent-care facilities — and lower quality — because transit times may increase for patients who arrive at the ER but must then be moved to a full hospital for further treatment.

N.C. series explains high cost of cancer drugs

As part of an ongoing series on the cost of health care in The Charlotte Observer and The News & Observer in Raleigh, N.C., Ames Alexander, Karen Garloch and Joseph Neff put together a two-part examination of why independent oncology practices are vanishing and what effect that trend is having on the cost of cancer care.

In the end, it seems to come down to one simple fact: The system strongly incentivizes hospital-based oncology practices by essentially allowing them to charge more than their independent competitors.

…when hospitals buy (independent) practices, prices go up. Patients are billed based on the hospital fee schedule.

Nationally, chemotherapy costs 24 percent more in a hospital-based outpatient setting than in a doctor’s office, according to a study by the consulting firm Avalere Health.

“The suggestion that when a (physician) group comes to us … we raise their prices, that’s not true,” said Carolinas HealthCare President Joe Piemont. “When the group comes to us, they charge our prices. … These are our negotiated rates with (private insurance companies).”

While there are many other factors involved, the basis for the differences is that hospitals can bill insurers at higher rates because they have more leverage when negotiating. Hospital representatives say the higher prices go, at least in part, toward charity care, as well as additional services not provided by an independent practice.

Reporters hoping to replicate the trio’s work would do best to start with their July AHCJ article explaining how the series had come together, as well as their latest “How we reported this story” sidebar, located partway down this page.

Financial documents help explain independent, not-for-profit hospital’s challenges

In the Tampa Bay Times, Letitia Stein writes about a local independent not-for-profit hospital that’s struggling financially and may be looking for a buyer. In some ways, it’s more business story than health story, but Stein relied heavily on the same public financial documents that AHCJ members use regularly, and fleshed them out with the help of familiar sources.

Bayfront’s financial statements help explain the interest in a partnership. In 2011 and 2010, its operating margins, key indicators of its core patient-care business, were razor thin — less than 1 percent, state records show.

In 2009, the operating margin — the difference between patient-care revenues and costs — was $4.8 million in the red.

To add context to those numbers, Stein talked to local and national experts on the business of health care. For example:

“It seems to me the biggest challenges are how to survive when revenues are barely growing and (Bayfront) has a very large Medicare and Medicaid share with few privately insured (patients),” said Mark Pauly, a professor of health care management at the University of Pennsylvania’s Wharton business school, who reviewed Bayfront’s 2011 state financial filings.

The story itself is a snapshot of why independent not-for-profit hospitals are an ever-rarer breed, but more importantly, it’s an example of how a well-trained health journalist can take a straightforward business story and tie it into the larger narrative of a region’s health care ecosystem and economy with the help of the right documents and sources.

AHCJ tip sheets