Hospitals tap insurers for price hikes as wages climb

U.S. hospitals are asking insurers to pay them up to 15 percent more to help offset rising nurse wages, The Wall Street Journal reported May 9. 

Typically, hospitals request about 4 percent to 6 percent annual price increases and end up winning an average of 3 percent, according to the report. 

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, according to the Journal. 

During a recent earnings call, HCA CEO Samuel Hazen said HCA will ask insurers and employers to pay it more after it saw $500 million in higher-than-expected labor costs this year. 

UHS CFO Steve Filton also said UHS is seeking rate boosts to absorb a portion of the wage inflation and is willing to "cancel contracts" if payers do not provide the increase, according to the Journal.

Many insurers and employer groups are rejecting the rate increases, arguing that many hospitals can absorb higher labor costs without increasing their rates. 

If hospitals win higher prices, it could result in higher health insurance premiums, according to the report. 

Read more here.

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