Hospitals in Indianapolis overcharge insurers, study suggests

A study suggests employers and consumers are paying more for healthcare because Indianapolis hospitals overcharge health insurers. However, some hospitals are questioning the study's results and methodology, according to the IndyStar.

The study, published in the International Journal of Health Economics and Management in September, examined publicly available data on four major nonprofit health systems in Indiana to calculate their margins. The study found each had margins of more than 10 percent, and Mishawaka, Ind.-based Franciscan Health had the highest at 20 percent.

Michael Siebold, a Tucson, Ariz.-based healthcare consultant and the author of the study, said Franciscan Health, IU Health and St. Vincent collectively made almost $8 billion from 2013-17. This represents a 23 percent margin, while nonprofit hospitals nationwide usually operate at a margin between 2 and 3 percent. Mr. Siebold said Anthem dominates 70 percent of the market share in Indiana, which may lead some to believe it could have controlled prices better than evidenced.

However, stakeholders in the state's healthcare industry raised questions about what the article, which was partially funded by an Optum subsidiary, concludes, as well as its methodology. Franciscan Health Central Indiana's CFO Keith Lauter told the IndyStar, "Our negotiations with the large companies such as United and Anthem are extremely challenging. They're very tough negotiators. … We do not feel like we have an advantage in terms of leverage in negotiating power."

Brian Tabor, president of the Indiana Hospital Association, told the publication, "Typically when you look at a study like this, you like to have apples to apples, and this is kind of a whole fruit salad. A lot of things are lumped together in a way that seems to drive a narrative. I have a lot of questions about the methodology here."

To view the study, click here.

Access the full IndyStar report here.

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