Why do hospitals care about health care costs?

OldNurseEducator · Mar 9, 2011

People always talk about how such and such procedure is expensive and the equipment is expensive.
Im curious why hospitals care about expenses when its the patient and their insurance who have to worry about their expenses?
Also, if a patient leaves AMA, why do hospitals care? The patient still has to pay for their services with or w/o insurance if they decide to leave AMA.

Please learn more about the financial aspects of being a patient in a hospital. Learn more about Medicaid and Medicare costs! Do your homework. :twocents:

BrianaN · Mar 9, 2011

People always talk about how such and such procedure is expensive and the equipment is expensive.
Im curious why hospitals care about expenses when its the patient and their insurance who have to worry about their expenses?
Also, if a patient leaves AMA, why do hospitals care? The patient still has to pay for their services with or w/o insurance if they decide to leave AMA.

Often times patients and insurance companies do NOT pay for the entire procedure. There is a "debate" between the hospital administration and the insurance company over how much an insurance company will actually cost. A patient without insurance can not be refused care, so often times if they are unable to pay they excessive costs of treatment the hospital must shoulder the costs.

AMA...well there are different issues. You should just read a bit more on health care in general.

systoly · Mar 9, 2011

You're right, it's patients and insurance companies, except they don't worry, they just don't pay.

OldNurseEducator · Mar 9, 2011

You're right, it's patients and insurance companies, except they don't worry, they just don't pay.

You may find many cases where that is true...but some people do pay hundreds of dolllars a month to cover health care and prescription costs. I suggest that YOU have some learning to do ALSO! :twocents:

netglow, ASN, RN · Mar 9, 2011

A hospital is a business, and just like any business they expect to profit greatly. Hospitals receive payment from some entity other than the patient directly in most cases. Insurance, medicaid/care are the majory pocket book players. Hospitals know how much they will be paid for any given diagnosis - pretty much. The insurance companies determine how much a hospital will be paid for every service. The hospital, in order to make a profit is acutely aware of how much money they can make off treating you. In fact, they know almost exactly when your insurance company will begin to stop paying for your care. Any care beyond that point will be money that the hospital must find another source of payment for. They know it is very unlikely that you will have 10s of thousands of ready cash to pay, so this usually is when you are offered only certain modes of treatment, or told frankly that your insurance will not cover a treatment, or will be discharged (as long as you are stable).

Now it's not that simple, there are very intricate algorithms involved and that is why hospitals have a large base of case managers to be sure that they know what you are capable of paying for - what your insurance plan will cover. The hospital knows that due to EMTALA they must stabilize you. But if it is at all possible, they will attempt to find that golden time when you reach a stable zone and getcha out to a SNF, LTC, etc before you have a complication while inpatient that increases your stay. This helps them limit their financial loss.

thinkertdm · Mar 9, 2011

Insurance only pays pennies on the dollar for most things. A procedure that costs $15 will only get maybe $5. Do you ever check your EOB's?

Hospitals are there to do one thing- make money. Like any business. Not give services away for free.

Don't worry, it's a common misperception that hospitals don't need to make money. Like to pay for things. Money doesn't grow on trees, you know. And since insurance companies only pay a small percentage of the actual cost (and the patient often can't), they need to make sure they don't lose money. Because then they would go bankrupt.

Mulan · Mar 9, 2011

People that don't have insurance in many cases just do not pay.

There are also people that have insurance that don't pay their co pays, cost shares, etc.

Either they can't afford it, or they can and just refuse to pay it.

Erclifton85 · Mar 9, 2011

Why not? Why wouldn't hospitals care?

classicdame, MSN, EdD · Mar 9, 2011

there is a huge difference between what is charged and what is received. We get about 29 cents for every dollar we charge. From that we have to pay a lot of folks and keep up the facility, etc. The real question in my mind is why do people think they deserve something for nothing?

AMA - hospitals are concerned that patients make bad decisions then blame the hospital when things don't work out right. People refuse care then sue because the result was not good due to their own bad decision.

MrWarmHearted · Mar 9, 2011

unfortunately, in this system, there are costs that need to be taken into consideration. Like any business, it costs money to run a hospital 24x7,365 days a year, huge energy costs, staffing salaries in addition expensive procedures.

What if the patient does NOT have insurance? what if their insurance does/will NOT cover the bill?

OldNurseEducator · Mar 9, 2011

unfortunately, in this system, there are costs that need to be taken into consideration. Like any business, it costs money to run a hospital 24x7,365 days a year, huge energy costs, staffing salaries in addition expensive procedures.
What if the patient does NOT have insurance? what if their insurance does/will NOT cover the bill?

Good post Very true. Costs are exhorbitant...that's why it is also very important to try to curb waste of supplies, etc. Spend some time someday actually looking at what is charged to the insurance company. Did you know that is you are a "self-pay", the bill is higher. A lot higher! Because most hospitals, labs, doctors will take the UC fee for service but will charge the "self-pay" patient what they would actually charge. Learn about it...it's fascinating, gives you a whole different perspective on things, when it's coming out of your own pocket. :twocents: