Hospital Announces They Will Reduce Their Prices

Indiana’s largest hospital system has announced it will reduce their hospital prices. A Rand Corporation study has found that Indiana hospitals charge on average three times what Medicare does…………………”2020 Rand study found that IU Health prices between 2016-2018 ran 33% higher than the national average.”

ARTICLE REFERRED BY ERIC DREYFUS, Sr. Vice President Assured Partners

IU Health announces price freeze at first-ever hospital transparency meetings

Shari Rudavsky – Indianapolis Star

After hearing many constituents complain about the high cost of medical care and hospital billing, Fort Wayne Sen. Justin Busch decided that it was time for the public to have any opportunity to ask questions of the state’s health care institutions. Last year he authored a bill that required hospitals and health insurers doing business in the state to each hold an annual public forum to discuss pricing in the interest of transparency.

This year, the first that the bill took effect, many of the affected non-profit hospitals waited until the final weeks of the year to hold their hour-long sessions in which they presented a picture of their finances while touting the work they have done.

Although many of the hospital presentations appeared somewhat pro forma, the state’s largest hospital system, IU Health, took the opportunity at its forum on Dec. 16 to announce that it will strive to reduce fees to be in line with the national average by 2025.

Indiana’s hospitals have long come under fire for pricing, often considered out of line with what peers in other states charge. An oft-cited study by the Rand Corporation found that Indiana hospitals charge on average three times what Medicare does.

The state’s high health care costs in part inspired Busch, a Republican, to push for legislation here that would spur hospitals to share information about their finances. He said he knew of no other state that has a similar system.

“This is not meant to be an attack,” he said. “We’re just trying to shed light on how it all works… Being transparent is never a bad thing and I think it can be good for the systems as well.”

IU Health took advantage of the opportunity of its public meeting to announce that it will be working over the coming years to make health care more affordable. The hospital system has come under fire for its high prices.

2020 Rand study found that IU Health prices between 2016-2018 ran 33% higher than the national average.

“We have taken that study very seriously,” said Jennifer Alvey, IU Health senior vice president and chief financial officer. “We are trying to do it as fast as we can.”

To help accomplish the goal, the hospital system will keep prices flat for the next four years for all payers, having already done that from 2020 to 2021. The previous year prices increased 2.4%. In 2021 IU Health reduced rates for many common outpatient services by $100 million.

Over time the price reduction plan will save the state’s healthcare consumers more than $1 billion, IU Health officials said.

Because of Indiana’s highly competitive health care environment, IU Health’s decision to lower its prices may have ramifications outside of its own walls and lead to lower health care prices across the board, Alvey added. IU Health is the largest health care system in the state.

“We actually feel like what we’re doing will drive the prices down in Indiana,” Alvey said. “That’s why we think the program’s really elegant.”

Starting with transparency

Hoosiers for Affordable Healthcare, a group of local business leaders that advocate for consumers, had questioned why IU Health’s prices and those of other hospitals in the state are out of line with hospitals elsewhere.

The group, which had pushed for the legislation requiring hospitals to hold the presentations, had hoped they would lead to decreases in the cost of health care.

“There is really support for market based reform approaches and we thought what’s a better way to start than transparency,” said Brian Blase, an advisor for the group. “We heard that an annual meeting would be a good mechanism for the board of the hospital to understand what the impact is of prices on that community.”

But the state’s hospital systems and insurers fulfilled the new requirement in a variety of ways.

While some held in-person events, most opted for virtual-only events. Even then approaches differed. Some took questions in advance, others invited participants to type their questions in the chat. Anthem did not take questions at all during the forum but invited attendees to email after the forum concluded.

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Many of the presentations included heartwarming videos touting the company’s community service efforts.

That was not what Allen Hubbard, chairman of the board of Hoosiers for Affordable Healthcare, had initially envisioned. He had hoped that the hospitals would give the public the opportunity to comment. While he applauded IU Health for their announcement, he added that none of the other hospitals had acknowledged there’s a problem with their prices.

“It shows the arrogance and insensitivity to the needs of their constituents,” Hubbard said. “These are non-profit hospitals that should operate for the benefit of people in their communities.”

Hubbard also said that he had hoped the hospitals would hold the meetings earlier in the year and not have them all within such a short period of time.

The scheduling was not deliberate but due to the unpredictable nature of the COVID pandemic, said Brian Tabor, president of the Indiana Health Association.

Initially many hospitals had planned to hold their presentations after the fall surge abated but hospitals remained busy throughout the fall.

“Things haven’t really gone back to normal,” Tabor said. “Our members have no problem with being transparent about their finances.”

In fact, a recent study in the Journal of General Internal Medicine found that Indiana had the fourth highest percentage in the country of hospitals complying with new federal regulations that require for prices to be disclosed online.

The Indiana Hospital Association also has a website that lists prices for how much hospitals charge for certain procedures as well some out-of-pocket price estimator tools.

Contact IndyStar reporter Shari Rudavsky at Follow her on Facebook and on Twitter: @srudavsky.