Choosing The Right Battlefield
The Houston medical industrial complex is a fortress built on BUCA market dominance. Reference Based Pricing infidels foraging for hospital encounters must understand the market and the extent to which hospitals will grant entry within their walls if at all.
A key to understanding this lies within the foundation of what hospitals generally bill insurance companies they have contracted with through managed care contracts.
Amounts Generally Billed (AGB) for hospitals refers to the average percentage of total billed charges that are typically paid by insurance companies for hospital services. For example, Houston Methodist AGB averages 14-20% of billed charges which Is the equivalent of 80-86% discount off billed charges.
If Houston Methodist bills $10,000 in gross billed charges, the AGB would be about $1,400 -$2,000. That’s the average of what managed care contracts through insurance companies contracted with Houston Methodist would pay on $10,000 in gross billed charges.
Below is Tsun Tzu’s RBP Battlefield Mapping for Houston hospitals showing Houston Hospitals vs Reference Based Pricing Plans:
SOURCE: Methodist Healthcare
Tier 1: MOST aggressive (high balance billing + low tolerance)
- Memorial Herman Health System
- Texas Childrens Hospital
Tier 2 – Moderately Aggressive (Negotiates but pushes hard)
- Houston Methodist
- Baylor St. Lukes
Tier 3 – Least Aggressive (More RBP compatible)
- HCA Houston Health
Tsun Tzu’s Practical Considerations For Reference Based Pricing Plans
- Avoid Memorial Herman and Texas Children’s Hospital if possible otherwise plan for escalation and legal support.
- Methodist has been traditionally open to pre-service negotiation for Single Case Agreements if fast and structured.
- Target HCA Houston Health
Translating Tsun Tzu’s 3,500-year-old epistle has not been easy. We do not guarantee accuracy.
