Health Care

The state of health care prices in West Michigan

January 17, 2017
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Throughout my long career, I had the privilege of knowing and working with many fine hospital trustees. They are the people who set the policies that govern a hospital’s operations. They advocate for the hospital in the community. Hopefully, they advocate for the community to the hospital. Also, they are the ones who approve the prices patients and insurers are charged by their system.

Few trustees have a long tenure, so they might be forgiven for not having the long historical view of the hospital and the things for which they advocate.

Yet they might be interested to know how things changed. Many have represented the prices of their system to the community and repeated what they had been told in the hospital board room, without understanding the changes.

At one time, the trustees of one of our major hospital systems were very proud of the fact that their institution had the very lowest prices in the state. This was a great source of pride, and this was at a time the reputation of the community for having great care spread at the lowest price far and wide. For years, we were smug in pointing to our price advantages, and the trustees often mentioned how the rest of the state should be like us.

Then we entered an era of saying that our prices were in the bottom quartile of hospitals in the state. No longer were we the price leader, but at least we were better than many. Our bragging rights were maintained, although there were signs that the pride of having relatively low charges was fading. At least our medical personnel continued to exhibit high standards.

We then entered an era of saying our prices were competitive with others. Our point of pride radically changed. No longer were we lower priced; we were comparably priced. Somehow the standard of comparison now allowed our prices to increase to the level of most others.

Currently we are in a new era. Our trustees tell us we should be grateful for the wonderful array of services that are provided, regardless of the price. No longer is the conservatism and thrift of our prior leaders being pursued; we are in an era where we are told to forget the costs and be grateful to our wonderful leaders for building a wonderful health care empire.

Isn’t it interesting to note how things have changed?

Unfortunately, when one system loses its focus on costs, others are free to follow. Health care markets evidence a lot of shadow pricing by the various providers, so if one has higher prices, others are free to raise their prices, too. There is evidence this has been occurring.

Lately, some payers have noted that local prices now are among the highest in the state. Interesting how things change.

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