The Difficulties of Reducing Healthcare Costs with High Hospital Facility Costs

The soaring cost of hospital facility fees is giving rise to grave concern in the healthcare industry, amid cries for reduction of healthcare costs. At least since the year 2000, when Medicare established billing standards for doctors employed by hospitals, those hospitals have been obliged to charge facility fees which are routinely added onto patients bills.

These facility fees apply to more than the services actually provided within the hospitals themselves, but also in outpatient care centers and doctors offices, because those services have been purchased by the hospital-based healthcare system. According to Soriant HealthCare, patients and critics of the healthcare industry argue that this billing practice unfairly adds billions of dollars to our country’s soaring healthcare costs, creating a situation that cries out for reform.

Insurance companies protest against these fees and often even refuse to pay them, thereby increasing the patient share of the bill. But removing these charges, or asking the hospitals to absorb facility fees has proven to be a very difficult not to crack in actual practice, because hospitals have legitimate points to justify their position.

Why hospitals must charge facility fees

Hospitals argue that they can’t afford to stay in business without the facility fees because of their own skyrocketing expenses. Increasing costs associated with malpractice insurance, losses from non-paying patients, and the ballooning costs of high-technology equipment and medical personnel all act to increase hospital facility costs.

Without the stream of income from facility fees, some hospitals claim they would be forced to close their doors, or at least consolidate with other hospitals in the area. The problem with this is that it would reduce available healthcare for inhabitants of these areas, and in some cases, lengthen the amount of time required for emergency patients to reach the nearest hospital.

Congressional scrutiny

While Congressional budget-cutters scrutinize Medicare payment policies and other areas in the hope of finding reductions in healthcare costs, their investigation has naturally led them to examine the facility fees being charged by hospitals. Already feeling the pressure from this kind of scrutiny, hospitals are working to protect themselves and their interests by enlisting support from such groups as the Service Employees International Union, which represents more than one million medical care employees.

If those in charge of the Medicare program were to decide that facility fees should be disallowed and stop paying those fees, all health care insurers would likely follow suit, and quickly put an end to all facility fee charges throughout the country. Hospitals say this would be disastrous for them, and that many of them could not survive the consequences.

Where facility fees apply

Facility fees can also be charged in any of the following situations: private doctors who have sold their practices to a hospital, but stayed on as an employee; outpatient medical centers which are part of a network owned by the hospital; urgent care centers which have been set up by hospitals for treatment less serious than hospital care; and outpatient surgery centers where doctors perform routine operations.

Hospital facility fees – yes or no?

The American Hospital Association goes so far as to say that phasing out facility fee payments threatens patient access to care. The organization also contends that hospitals routinely handle patients which are sicker and require more complex care than doctors’ offices, and should therefore be paid more.

Furthermore, hospitals point out that charging facility fees for medical care in doctors’ offices and care centers which are part of their networks help spread the cost of maintaining expensive units that must stay open around the clock – without facility fees, many of these would also close down.


Sheldon Armstrong
Sheldon Armstrong is a regular contributor for INFOtainment News. He loves writing about technology and keeping up with the latest gadgets on the market. In addition, he contributes articles covering a wide range of topics together with his friends who appear as guest writers every now and then.

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