• linkedin
  • Increase Font
  • Sharebar

    Hospital facility fees: Why cost may give independent physicians an edge

    Why are hospitals reimbured at a higher rate

    In this era of cost reduction, independent primary care practices have an edge: It’s called value.

    As calls from government and private payers intensify for hospitals to trim costs and become more transparent in their pricing, some experts believe the pendulum may swing to favor providers delivering quality care at the best price.

    Read: How to survive in independent practice

    The notion flies contrary to the current trend of physicians selling their practices to hospitals, which is believed to increase an institution’s bargaining power and allow the health system to deliver outpatient services and be reimbursed at a higher, outpatient rate.

    All of these factors have perpetuated “the great myth” that it takes a large organization with numerous physicians to operate in today’s healthcare environment, says Harold Miller, chief executive officer for the Center for Healthcare Quality and Payment Reform.

    “The myth is that you have to be a Geisinger to survive,” he says. “In every other area we promote small business. We have to show that independent practices really can provide better care.”

    Independent physicians interviewed by Medical Economics agree. They have learned ways to provide quality care, reduce costs, and face the barrage of complex regulatory and management compliance requirements in an ever-changing health system.

    Paying for place

    Why do hospitals and large health systems cost more than independents, even for the same procedures? One major factor is facility fees.

    Read: Hospital consolidation trends leads to rise in facility fees

    When a service is provided in an independent practitioner’s office, it brings one single payment. But when the same procedure is performed in a facility, either an outpatient department or an ambulatory surgical center, Medicare pays twice: To the facility and to the provider. These fees are meant to cover hospitals for overhead that a freestanding physician’s office does not carry.

    Hospitals charge these fees because, like many providers, they aren’t paid for a large part of what they do, Miller says.  They get no money specifically for having an emergency room that can treat patients 24 hours a day.

    “There is a legitimate case to be made that they charge more than others,” he says. “People will be unhappy when a hospital is closed at night, and they have a heart attack.”

    But hospitals are purchasing physician practices at a fast clip and, according to the Medicare Payment Advisory Commission (MEDPAC), these practices are increasingly being converted into outpatient departments, which allows the hospital to be paid more for various services than does a freestanding physician’s office.

    These fees are costing the healthcare system billions, and contributing to an unlevel playing field between independent practices and hospitals. Insurance coverage of facility fees varies, and many patients become stuck with large, sometimes crippling, medical bills as a result.

    Next: Facility fee backlash

    Tammy Worth
    The author is a freelance writer based in Blue Springs, MO.


    You must be signed in to leave a comment. Registering is fast and free!

    All comments must follow the ModernMedicine Network community rules and terms of use, and will be moderated. ModernMedicine reserves the right to use the comments we receive, in whole or in part,in any medium. See also the Terms of Use, Privacy Policy and Community FAQ.

    • ToniaKellett
      When you are working with your private office everything is manage by you and that increase the cost but if you work in a government than this reduces it.Buy Dissertation From Dissertation Cube
    • RebeccaBarber
      Why there is so much high pay for physicians you should feel the pain of poor ones who can't afford it. I am thing about writing an essay on this topic.

    Latest Tweets Follow