A recent article published by The Economist misdiagnosed the cause of America’s rising healthcare costs: it omitted important context and key facts about the critical role hospitals and health systems play in their communities, while ignoring the responsibility corporate insurers and drug companies have in fueling runaway cost increases.
Hospitals are responsible for treating patients around the clock with complex and chronic conditions who would otherwise be unable to receive adequate care at other facilities. Importantly, hospitals are also required to treat any patient who walks through their doors, regardless of their ability to pay, making hospitals a key component of Americans’ access to healthcare. This role is even more vital in rural communities, since rural hospitals are often the only sites of care in their area, providing irreplaceable services to seniors and people with special health needs.
Hospitals struggle daily with significant financial challenges, including high labor costs, chronic underpayments from Medicare and Medicaid, and excessive and burdensome corporate insurer policies that lead to delays and denials of needed care to patients. Ultimately, administrative costs account for more than 40% of the total expenses that hospitals incur when delivering care to patients. Adjudicating claims from corporate insurance companies cost healthcare providers over $25 billion in 2023 alone, and 70% of insurance company denials ended up being ultimately overturned.
Consolidation has been a huge issue in the insurance industry, as corporate insurers have poured billions of dollars into acquiring physician practices, which can result in increased premiums for patients. In fact, the largest employer of physicians in America is now the nation’s largest corporate insurance company. The challenges that hospitals face often lead to some hospitals affiliating with health systems to not only keep their doors open so they can continue serving their communities, but also to expand services and improve the quality of patient care. These affiliations can be a lifeline for rural hospitals, 30% of which are at risk of closing.
America does face healthcare challenges, but we need real solutions that ensure access to care for patients and sustainability for providers – not a blame game that ignores the biggest barriers to both.