AHA responds to report on hospitals' requested price hikes to insurers

Rick Pollack, president and CEO of the American Hospital Association, said a recent news report about hospitals asking insurers to pay them up to 15 percent more to help offset rising wages passed over the bigger picture of hospitals' cost structures. 

The Wall Street Journal reported May 8 that several large healthcare organizations in recent months, including Nashville, Tenn.-based HCA Healthcare and King of Prussia, Pa.-based Universal Health Services, said they will be asking for substantial rate increases to offset inflation, including labor costs. While neither hospital operator specified the price increase sought, people familiar with the negotiations said that some hospitals within the networks are seeking boosts of 7.5 percent to 15 percent.

Mr. Pollack, who has led the AHA since 2015, pointed to higher costs for labor, drugs, supplies and equipment and economy-wide inflation as drivers of "enormous pressure" on hospitals' ability to provide care.

"Labor expenses, which account for more than 50 percent of hospitals' total expenses, per patient increased 19 percent through 2021 compared to 2019 levels," Mr. Pollack said in a May 13 prepared statement. "And, average hospital drug expenses by the end of 2021 were 28 percent higher than pre-pandemic levels and 37 percent higher per patient. In addition, people put off care during the pandemic, coming to the hospital sicker and requiring more resources.

"A recent Wall Street Journal article ignored these critical factors, while also failing to examine the role that commercial health insurers play in health care spending. Commercial insurance companies have historically been reluctant to pass lower costs on to consumers in the form of reduced premiums. That problem was laid bare when the Department of Justice challenged the attempted merger of Cigna with Anthem," Mr. Pollack said. 

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