Hospital Cuts Costs and Passes Savings on to Self-Pay Patients

Modern Healthcare reports that hospitals' glacier-like movement toward joining the rest of the business world in actually telling customers how much they'll have to pay for their services may have reached a milestone this past April in a small town in southeast Texas.

Cleveland (Texas) Regional Medical Center, which is about 40 miles north of Houston, took the unusual step of announcing in a news release that it had reduced costs for a large number of its services by 15% and was passing those savings along to its self-pay patients. The hospital announced it was cutting prices for the following divisions: cardiopulmonary, dietary, emergency and trauma, intensive care, labor and delivery, medical and surgical, obstetrics, operating room/ post anesthesia and respiratory. Fees associated with medical supplies also were cut.

Despite those changes, 55-bed Cleveland Regional, like most hospitals, is still far from what would be called a price-transparent operation. Cleveland Regional doesn't have a price list it can give to patients or offer that information on its website. But the mere act of acknowledging their prices to the public and sharply reducing them as well are unusual steps.

The idea to cut prices came from the hospital's business staff and was an internally focused collaborative effort. Nonetheless, the change makes Cleveland Regional a part of two broader trends: the move to provide more disclosure about patients' out-of-pocket costs, and efforts to give self-pay, uninsured patients a better deal than they have received historically.

The heightened transparency from providers is coming in part because of the growth of high-deductible health plans in which patients pay most, if not all, of the upfront costs of care until they meet a substantial deductible. That growth is producing increased price sensitivity for certain types of care. For example, imaging is an area where price sensitivity is becoming more prominent, but for acute inpatient care it's still rare.

Hospitals are working hard to cut expenses in anticipation of slower growth in reimbursement, tied in part to the elements of the Patient Protection and Affordable Care Act, but also because of the industry shift toward providing value-based care.