Updated August 27 at 5:27pm

Study documents disparity in payments to hospitals

By Richard Asinof
Contributing Writer
A comprehensive study documenting a disparity in payments to hospitals in 2010 in Rhode Island lays bare “the legacy of the old way business was done, through confidential negotiations between hospitals and commercial insurance companies,” according to Thomas J. Breen, vice president and chief financial officer at South County Hospital in South Kingstown.

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Study documents disparity in payments to hospitals

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A comprehensive study documenting a disparity in payments to hospitals in 2010 in Rhode Island lays bare “the legacy of the old way business was done, through confidential negotiations between hospitals and commercial insurance companies,” according to Thomas J. Breen, vice president and chief financial officer at South County Hospital in South Kingstown.

The study, “Variation in Payment for Hospital Care in Rhode Island,” conducted by Xerox, examined inpatient and outpatient costs at Rhode Island’s 11 acute-care community hospitals as well as reimbursements by government and commercial payers for 2010.

Released on Dec. 19, 2012, by R.I. Health Insurance Commissioner Christopher F. Koller, the study found a large disparity in the commercial health-insurance market, with the highest-paid hospital receiving twice as much per stay as the lowest-paid hospital for similar care.

“Commissioner Koller did a great job in promoting transparency about how hospitals get paid,” Breen said. “It adds value, not just to South County, but to the system as a whole.” By making payments transparent and linking it with quality measures, Breen continued, “it creates a new dynamic and can only lead to positive results.”

South County is, at this moment, poised to become the only remaining independent, acute-care community hospital in Rhode Island. Westerly Hospital is in the midst of being sold to Lawrence + Memorial Hospital in New London, Conn., with the deal expected to be completed by the end of the month. Prime Healthcare Services of Ontario, Calif., is bidding to purchase Landmark Medical Center in Woonsocket, and Memorial Hospital in Pawtucket is planning to become part of the Care New England hospital network.

As the OHIC study documented, despite being the top-rated hospital in Rhode Island for safety and patient satisfaction, South County was one of the lesser-reimbursed hospitals in the state.

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