Negotiating the Cost of Care Essay

Negotiating the Cost of Care Essay

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Negotiating the Cost of Care
Prior to the 1980s and the advent of managed care, all hospitals set uniform prices for their services. But negotiating prices separately for each payer has become standard practice and depends largely on the bargaining power of the payer or employer. Bargaining power, or clout, depends both on the size of patient population represented as well as the ability of the negotiating group to channel patients to that particular facility. Payers and employers negotiate rates with preferred facilities and then often restrict the benefits they will pay to non-network or non-preferred providers in an effort to encourage patient populations to seek care from facilities where the preferred rates have been negotiated. The structure of the benefit plan drives patients to providers who have negotiated preferred rates; these are typically reimbursed at higher rates. Hospitals or providers benefit by gaining market share; employers, payers, and managed care organizations pay reduced fees and patients pay less out-of-pocket costs.
While fee negotiation has been a practice that has been somewhat effective in keeping employers’ costs manageable, healthcare continues to take a larger piece of companies’ profit margins. Some employers seeking unique ways to keep costs down are looking toward medical tourism where people travel from more developed areas of the world to less developed countries for complex medical procedures at vastly reduced costs – sometimes also called ‘medical outsourcing’ (Forgione & Smith, 2007). This is also a practice considered by Blue Ride Paper Products in the case study “Global Medical Coverage” (McLaughlin & McLaughlin, 2008) where the mid-sized employer attempted to encourage its employees to s...

... middle of paper ...

...affordable care for all (Longe, 2010).

Works Cited

Forgione, D. A., & Smith, P. C. (2007). Medical tourism and its impact on the US health care system. Journal Of Health Care Finance, 34(1), 27-35.
Longe, T. (2010). The ethical and legal complexity of medical tourism. Retrieved from:
McLaughlin, C. & McLaughlin, C. (2008). Health policy analysis: An interdisciplinary approach. Boston, MA: Jones and Bartlett Publishers.
Stone, B. (2013). The art of negotiation; Hospitals and managed care. Chicago Policy Review. Retrieved from:
York, D. (2008). Medical tourism: The trend toward outsourcing medical procedures to foreign countries. Journal Of Continuing Education In The Health Professions, 28(2), 99-102. doi:10.1002/chp.165

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