New research finds that mothers who receive a surprise out-of-network bill after having their first baby have 13% higher odds of switching hospitals for their second delivery.
This article appears in the May/June 2019 edition of HealthLeaders magazine.
Every business not only wants to attract new customers but to keep its existing ones, and hospitals and health systems are no different. Unfortunately, surprise medical bills can be the element that drives patients away from one hospital and into the waiting arms of the competition.
New research published this month in Health Affairs provides hospitals with one of the clearest examples yet of how serious a threat to business surprise medical bills can really be, beyond having to deal with disgruntled patients.
The research comes as bipartisan legislative efforts to curb surprise medical billing practices ramps up as various stakeholders from hospital groups to newly formed coalitions make their voices heard about surprise billing.
The research found that mothers who receive a surprise out-of-network bill after having their first baby have 13% higher odds of switching hospitals for their second delivery.
"I think our findings show that to promote patient loyalty, part of the experience is relative to billing," he says. "It's not just having a good experience with the doctors and nurses but also with what occurs afterwards."
The study also showed that switching hospitals paid off financially for those mothers.
"Mothers who switched after a surprise medical bill had a 56% lower relative risk of a second surprise medical bill, compared to mothers who stayed at the same facility after a surprise bill," Benjamin Chartock, another of the study's coauthors, told HealthLeaders.
The study, which included a sample of 63,630 women who had exactly two births, who didn’t switch metropolitan areas between births, and who had a choice of hospitals, revealed that 11% of mothers received a surprise out-of-network bill after their first birth.
However, even Garmon said he was surprised by the "strength" of the finding that switching yielded a 56% lower relative risk of a second surprise bill.
"That seems to suggest that these cases are concentrated at particular hospitals," he says. "If you receive a surprise bill, the optimal thing would be to switch."
4 ways to take action
The insight that surprise bills appear to be concentrated at certain hospitals is an important one because it shows that hospitals can—and likely should—take steps to reduce the odds that their patients receive a surprise out-of-network bill. Here are four actions hospitals can take.
1. Give providers an ultimatum: Garmon says hospitals that frequently generate out-of-network bills might consider giving their providers an ultimatum: "If you want to practice in my hospital … then you have to make a good-faith effort to be in network for all the health plans … so [we're] aligned."
Trying to ensure in-network status among providers isn't only important for patient retention, but according to research from the Robert Wood Johnson Foundation, fewer patients than ever have out-of-network benefits, which increases likelihood of bad debt for hospitals.
2. Disclose network status to patients: Sarah Schutz, the study's third coauthor, says that hospitals should disclose a provider's out-of-network status to a patient before he or she receives the service.
In that way, hospitals should think of network status as a critical aspect of price transparency.
Doing so now would help hospitals get out ahead of any legislation that's coming, since there's broad bipartisan support for curbing surprise bills. For instance, a bill from Rep. Lloyd Doggett (D-Texas), the chairman of the House Ways and Means' health subcommittee, would require hospitals to notify patients at least 24 hours in advance about a hospital or provider's network status.
3. Get a competitive edge: On the flip side, there's an opportunity for hospitals to advertise their low rate of surprise bills, just as some advertise their short emergency department wait times.
"Our paper shows evidence that this is a good dimension upon which to compete," Chartock says. "It may be one where hospitals can drive a competitive edge and eke out a little bit more profit."
4. Know which procedures might prompt patients to switch hospitals: Elective procedures are the ones that lend themselves most to comparison shopping, yet 1-in-10 elective procedures result in a surprise out-of-network bill.
That's why the authors purposely chose to research labor and delivery bills: The nature of pregnancy allows for advance planning and comparison shopping.
"Mothers have the ability to shop around and see what kind of facilities they want to use. They're not in an emergency situation," says Schutz.
The same is true for other highly utilized elective services like hip and knee replacements.
Knowing which procedures are most shoppable and utilized can help drive hospital price transparency initiatives, especially if you start with the top utilized procedures.
For instance, UCHealth's groundbreaking price transparency efforts launched with estimates for 38 services when they went live with its estimator tool in August 2018, before ramping up to include 238 services by late February. It's still adding more all the time.
The bottom line is that generating frequent surprise out-of-network bills isn't something that hospitals can afford to do if they want to be competitive.
"They are harmful things, and patients—when they have the ability—respond to them by trying to avoid them," Garmon says.
Alexandra Wilson Pecci is an editor for HealthLeaders.
Make every effort to ensure your providers are in-network.
Notify patients about network status ahead of their service.
Use in-network physicians as a marketing advantage.
Know which procedures are most shoppable.