The Wall Street Journal reports that hospitals increasingly demand patients pay up front before getting surgeries. Hospitals are purportedly tired of having to chase after patients to collect what they owe.
For years, hospitals and surgery centers waited to perform procedures before sending bills to patients. That often left them chasing after patients for payment, repeatedly sending invoices and enlisting debt collectors.
Advance billing helps the facilities avoid hounding patients to settle up. Yet it is distressing patients who must come up with thousands of dollars while struggling with serious conditions.
Some of the services hospitals want paid in advance include labor & delivery, joint replacement surgery and diagnostic imaging, just to name a few. Hospitals are demanding payment in advance not only for self-pay for elective procedures (when patients don’t have insurance coverage), but also for the patient’s estimated share of the cost after taking into account their health plan’s share.
Merritt Island Surgery Center is jointly owned by physicians and SCA Health, a subsidiary of UnitedHealth’s health-services arm Optum. “Before providing care, Merritt Island Surgery Center engages each of our patients individually to ensure they understand their potential out-of-pocket costs and are aware of available no-cost financing options,” the center said.
Some 23% of what patients owe is collected by hospitals before treatment, according to an analysis of first-quarter data this year from 1,850 hospitals by Kodiak Solutions, a healthcare consulting and software company. For the same period in 2022, the figure was 20%.
They are seeking advance payment for nonemergencies, they say, because chasing unpaid bills is challenging and costly. Roughly half the debt hospitals wrote off last year was owed by patients with insurance, the Kodiak analysis found.
The article was from the Wall Street Journal, which tends to report from a pro-business viewpoint. Nonetheless the reporter acted like it’s some kind of travesty for a health care provider to ask for payment prior to care. Back when I worked for a hospital-owned ambulatory surgery center we required patients to post a deposit for their share of the costs. For that matter, my dentist makes his patients pay prior to the service.
It’s just my opinion but there are some potential advantages for patients in being asked to pay their share prior to care. One is that by requiring payment in advance hospitals are forcing themselves to make a reasonable estimate of the cost of care. According to WSJ:
Patients often want to know in advance what their medical care will cost. Congress and regulators in recent years have ordered hospitals to be more transparent on prices, which vary widely, and limit surprise billing.
Another potential advantage is that being asked for money prior to the service may prompt patients to look elsewhere for better prices. Price discussions could even prompt patients to try to negotiate lower prices. Once you’re having an uncomfortable conversation about payment, why not ask for a better deal or threaten to leave? Discussions of pricing upfront may even make patients question whether or not they even need the services. I declined recommended services when told the price. The WSJ article seemingly agrees with me to a point, saying:
For patients, the hospitals say, knowing the cost ahead of service gives them the opportunity to comparison-shop and avoid getting walloped with a huge bill unexpectedly.
One downside of hospitals estimating patient cost-sharing and getting paid in advance is hospitals sometimes (ok, often) get cost estimates and bills wrong. It isn’t always easy to get a refund when you overpay. However, one thing we all can agree on is that discussions about costs between hospitals and patients are a good thing.
Read more at: Hospitals Are Refusing to Do Surgeries Unless You Pay in Full First
This could be a big step toward price competition among hospitals.
I hope hospitals provide accurate bills rather than ask for a deposit as my old hospital employer did. Otherwise it’s hard to compare prices.
The Surgery Center of Oklahoma has been giving price quotes and expecting payment in advance for well over ten years now.
However, this model only works for patients with savings accounts — including Canadians who come the Surgery Center to escape long waiting lists.
In the pay-up-front model described here, eventually we are going to have patients who have no money, and who will be medically damaged if they cannot get the recommended surgery. I am not sure what will happen then.