Op-Ed: Lowering Health Care Costs For Small Business

May 16, 2024

By Hazel Hurley

It is clear that our healthcare system needs a lot of work.

As a nurse, lawyer, and now small business owner, I know that the average American faces the looming threat of financial ruin in the event of illness or a serious accident. Small businesses like mine – which serve as the fabric of our incredible state – are frequently forced to choose between providing employees with competitive health benefits or investing in their own growth. What’s worse – there are common sense solutions pending in Congress that would address some of the glaring problems in our healthcare system today. As legislators in Congress consider ways to lower healthcare costs for small business owners and American consumers, I urge them to take up the Site-Based Invoicing and Transparency Enhancement (SITE) Act (S.1869).

A major contributor to exorbitant healthcare costs is unprecedented consolidation at the provider level. This involves large hospital systems acquiring small, physician-owned practices and off-campus care facilities. In fact, over the last several years the number of hospital-owned physician practices has skyrocketed so much that – for the first time – the majority of physicians now work for a hospital or a practice that they do not own themselves. This massive consolidation often leads to a practice called “dishonest billing,” which is when a hospital secretly reclassifies a doctor’s office they own as a hospital setting on a bill to get more money.

Hospital costs in New York City and the rest of the state are sky high and rising each year. According to federal data for 2020 – the most recent year available – the state’s per capita hospital spending was 43 percent above the national norm, up from 22 percent a decade earlier. An analysis by Peterson-KFF found that hospitals represented nearly a third of all health spending in 2022. This is simply not sustainable.

S.1869 is commonsense, bipartisan legislation that would put an end to hospital systems charging Medicare high hospital rates for standard care provided at off-campus outpatient facilities. The issue is extremely timely – a 2020 report by the Congressional Budget Office found that this practice could cost the Medicare system nearly $40 billion in unnecessary costs over the next decade.

The negative impacts of hospital consolidation is well documented beyond just Medicare. Hospital mergers raise the prices hospitals are able to negotiate with private insurers, which in turn inflate costs for small business owners already struggling to provide the best possible benefits to their employees and increase premiums owed by everyday Americans. Even worse, research shows that hospital consolidation is disproportionately impacting Medicaid patients’ ability to access care.

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The National Institute for Health Care Management found the following with regard to the impact of hospital consolidation on Medicaid patients: “When market concentration intensifies, hospitals can negotiate higher reimbursement rates from private insurers, which are typically greater than Medicaid rates. Hospital concentration may exacerbate inequalities in access to care among Medicaid patients, who are disproportionately low-income and in poorer health.”

As New York’s representatives at both the state and federal level consider ways to improve healthcare costs and outcomes for small business owners and American consumers, passing state legislation that bans dishonest billing as well as S.1869, is an obvious place to start.

Hazel Hurley

Hazel Hurley is a former nurse, an attorney, and now a small business owner with an office in Manhattan. 

Photo credit: HWM and Hazel Hurly.

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