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The Challenge of the Hospital Chargemaster

The Overarching Issue

With the publication of Steven Brill's 24105 word article entitled, "Bitter Pill-Why Medical Bills are Killing Us," in the March 4, 2013, edition of Time Magazine, the national discussion of the high cost of health care in America began to crystallize around issues involving the cost of hospitalization and overall health care costs in general in the wealthiest and most productive nation on Earth.


Brill's article follows a highly critical account of the cost of health care in America that appeared in The Healing of America, by T. R. Reid, noted author and Washington Post correspondent and a long-standing commentator for National Public Radio. Both Brill and Reid have compared the cost of health services in America to those of other developed nations; independently each has concluded that health care costs in the United States, if continuing their upward spiral unabated, can and likely will bankrupt our nation's ability to sustain the fabric of its economy.


The critiques of each of these authors, as well as those of several researchers who are seemingly aligned with their thinking (including Clayton Christenson, PhD, of Harvard University, the spokesperson for a line of thinking and research that embraces Disruptive Innovation in Healthcare as a method of saving our health delivery system), all focus on the seeming genesis of evil in the delivery system: the Hospital Chargemaster. With unbridled passion, and with a seeming growing credibility of this line of thinking, the critics of America's hospitals believe that the Chargemaster demonstrates both an inability and a lack of interest or commitment to controlling the cost of health care in this country.


The result, as concluded by many who endorse this perspective, is that if the United States allows health care costs to reach the level of 23% of GDP, this will constitute economic Armageddon and will bring the entire US economy to its knees. In other words, health care spending will account for all government and most private spending. Thus, the preeminent focus is on controlling costs of health care in America.


An Appropriate Response

The question now is how best to address the challenge of cost containment without diminishing the noteworthy accomplishments of America's health delivery system. The first step in a civilized dialogue addressing cost containment would be for health care executives to initiate substantive steps to correct and reform the Hospital Chargemaster and the inherent inconsistencies it has spawned. The task will not be easy to accomplish; for many years, the Chargemaster has served as a convenient representation of the "retail cost of health care" in most public discussions about hospital costs. However, as accurately pointed out by hospital critics, the Chargemaster does not reflect actual health care costs. Even within a single hospital system with multiple hospitals in the same geographic area, Chargemasters are not uniform, even though all hospitals in that area may be billing under the lead hospital of that system.


If each hospital system publicly acknowledges the existence of these inconsistent Hospital Chargemasters and launches what would begin as a 3-part program to correct the problems, this would identify hospitals as proactive leaders in reforming a system that as currently structured simply cannot prevail.


Recommended Changes


1. Hospital executives should publicly announce a commitment to ensure that the Hospital Chargemaster at all of their hospitals shall be standardized across the board.


2. Hospital executives should also announce a commitment to review all charges contained in the Chargemaster and ensure they represent the actual costs of health care, which includes a reasonable level of surplus that can be reinvested in services, thus ensuring consistency with their stewardship of public health.


3. Hospital executives then should convene and host a national conversation about how to correct the inconsistencies in the Chargemasters of all hospitals in America.


4. Then, and most importantly, the needed changes should be implemented and periodically audited to ensure they do not come unglued.



If adopted, the recommended changes would serve only as a first step in the challenging process of health care reform. However, from a hospital services perspective, the hospital systems would (a) emerge as an acknowledged national leader that recognizes the scope of the problem and (b) indicate its willingness to assume a leadership role in resolving the issues associated with the problem. This proactive and empowered stance is preferable to simply hibernating and awaiting federal action (which surely will come) that could radically alter the existing health care landscape and force more draconian changes on what is presently viewed as a reluctant-to-change and intransigent health care industry.


This issue of The Health Care Manager (33:1, January-March 2014) offers the following articles for the reader's consideration.


"Employee Age and Tenure Within Organizations: Relationship to Workplace Satisfaction and Workplace Climate Perceptions" reports on a study undertaken to estimate the relative influence of age or generation and tenure on job satisfactions and workplace climate perceptions. Findings suggest that age or generational differences may not influence employee perceptions to the extent that many have been led to believe.


"Dress Codes and Appearance Policies: Challenges Under Federal Legislation: Part II, Title VII of the Civil Rights Act and Gender" focuses on the issue of gender under the Civil Rights Act of 1964, suggesting that a policy governing dress and appearance based on the business needs of an employer that is applied fairly and consistently and does not have a disproportionate effect on any protected class will generally be upheld if challenged in court.


"Organizational Factors Influencing Health Information Technology Adoption in Long-Term-Care Facilities" pursues the premise that the adoption of health information technology systems in long-term-care facilities lags behind that in other sectors of health care and addresses the barriers to and organizational factors associated with such adoption in long-term care.


"Implementation of the Physician Assistant in Dutch Health Care Organizations: Primary Motives and Outcomes" reports on a study undertaken to examine the apparent reasons for employing physician assistants, relatively new to Dutch health care, concluding that they are being employed primarily for improving continuity and quality of care and for other reasons including providing relief for specialists' workload.


"Antecedents of Care by Physicians" reports on a study undertaken to examine factors that can affect the quality of care delivered by physicians, identifying the threat of malpractice charges and the level of Medicaid reimbursement as exerting significant negative impact and time spent with patients as having the strongest positive impact.


Case in Health Care Management: Your Word Against Your Manager's" asks you to consider what you might do when your immediate superior makes a serious error in a group meeting and angrily rejects your effort to correct the error.


"Patient Service Navigator: Improving Quality and Services and Reducing Cost Under the Affordable Care Act" describes a process that could serve to improve quality, facilitate better service, enhance the patient and family experience, and reduce costs in caring for patients in the hospital setting.


"Task Conflicts and Exclusive Professionalism in Nursing in South Korea" reports on a study undertaken to examine job conflicts arising between practical nurses and registered nurses, specifically addressing areas in which the duties of practical nurses at least partially overlapped the duties of registered nurses.


"Willingness to Participate in Accountable Care Organization: Health Care Managers' Perspective" documents a study that examined the ways in which health care managers have responded to the accountable care organization, noting that managers who perceived their organizations as lacking leadership support or commitment and other forms of support would be less willing to participate in accountable care organizations in the future.


"A Causal Model of Antecedents With Burnout Focusing on the Intermediate Role of Hardy Personality in Iranian Nurses" reports on research undertaken to present a causal model of antecedents of burnout emphasizing the role of hardy personality in enabling one to manage stressful situations and minimize the chances of burnout.


"Determinants and Benefits of Physical Activity Maintenance in Hospital Employees" reports on a study investigating whether the positive behavioral and anthropometric outcomes of a pedometer-based physical activity 8-week challenge were maintained 6 months after the conclusion of the program.


"International Classification of Diseases, 10th Revision Training: What Coders Are Saying" reports on a prepresentation and postpresentation survey completed by the attendees at a workshop concerning the application of the new International Classification of Diseases, 10th Revision, Clinical Modification/Procedure Coding System coding system to be effective October 1, 2014.