The American Hospital Association (AHA) reacted to a report from The Wall Street Journal that hospital and health systems have asked insurers to cough up more in the face of rising costs.
In fact, some healthcare providers have asked insurers to increase their prices by 7.5% to 15%, the WSJ reported. Rising labor expenses have been the biggest driver of higher costs for hospitals, particularly as a workforce crunch has forced providers to increase wages and boost incentives to fill open roles as retain staff. Demand for COVID-19-specific travel nurses has exploded. Overall, hospitals’ labor costs have jumped by one-third, according to a recent report.
According to the AHA, the WSJ’s version of events missed the full scale of rising expenses.
“After two years on the frontlines in the battle against this pandemic, hospitals and health systems have seen a dramatic rise in costs of labor, drugs, supplies and equipment,” Rick Pollack, CEO and president of AHA, said in a statement. “All of this, which comes on top of the impact of skyrocketing economy-wide inflation that is at a 40-year high, continues to put enormous pressure on our ability to provide care.”
Labor expenses increased 19% through 2021 compared to 2019 levels, Pollack noted. In addition, drug expenses by the end of 2021 were 28% higher than pre-pandemic levels and 37% higher per patient, while patient acuity levels have been higher as a result of people putting off care during the pandemic and requiring more resources for worsening conditions, he wrote.
“A recent Wall Street Journal article ignored these critical factors, while also failing to examine the role that commercial health insurers play in health care spending,” Pollack stated. “Commercial insurance companies have historically been reluctant to pass lower costs on to consumers in the form of reduced premiums.”
That issue was proven when the Department of Justice challenged the attempted merger of Cigna with Anthem in 2017, Pollack also noted.
Additionally, Pollack pointed out hospitals have been historically underpaid Medicare and Medicaid, which account for more than 60% of all care they provide.
“The pandemic has clearly demonstrated that America cannot be strong without its hospitals and health systems being strong,” Pollack concluded.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."