Hospitals rebuke idea of imposing pricing regs

In the wave of rising health-care costs, one Montana legislator is taking the state’s hospitals to task for having too much control and too little competition. This week, he told lawmakers in Helena that pricing regulations might be the fix.

Rep. Tom Woods, D-Bozeman, is seeking to place price controls on hospitals and pull them under the authority of Montana’s Public Service Commission.

He told the state’s House Human Services Committee this week that as the health-care economy grows, medical treatments have become overpriced commodities.

“We’re told that hospitals absorbing private practices bring greater efficiency. I disagree,” Woods said during the bill’s hearing on Wednesday. “I think it’s time to recognize that since hospitals are behaving like monopolies, we need to control them like monopolies.”

The state’s hospitals disagreed.

“We don’t view the hospital and health-care market through the same lens as Rep. Woods,” said Jason Spring, the chief executive provider of network integration at Kalispell Regional Healthcare. “There are more than 60 hospitals in Montana, all of whom focus on meeting the health-care demands of the communities they serve.”

Spring said in an interview on Friday that Montana has some of the lowest health-care costs in the country, according to the American Hospital Association.

“Yet we continue to provide high quality services in a rural setting,” he said. “Our outreach efforts in neighboring communities like Eureka and Browning and supporting services like the ALERT air ambulance are essential to our communities, yet costly.”

According to the American Hospital Association, community hospitals provided more than $35.7 billion in uncompensated care to patients in 2015.

Kalispell Regional Healthcare recorded spending more than $8.5 million in what hospitals refer to as charity care. North Valley Hospital — which became an affiliate with Kalispell Regional last year — contributed more than $2.2 million in charity care in 2015, according to its 2016 report.

Woods argued that charity care doesn’t impact every person feeling the weight of medical expenses. National health expenditures are projected to grow at an average rate of 5.6 percent over the coming decade, according to a new report by the Centers for Medicare and Medicaid.

If passed, House Bill 395 would place a pricing ceiling on nonprofit hospitals to charge 138 percent of the Medicare reimbursement rate for medical procedures and other services. For-profit hospitals could charge 150 percent.

The Montana Public Service Commission would need to approve any price increases. The commission typically regulates energy companies and other public utilities in the state.

Spring said that’s the wrong approach to balance the rising costs of health care as hospitals face challenges that drive costs. Some of those challenges, he said, include attracting and retaining a qualified workforce in a rural setting, addressing the growing health-care demands of an aging population and “simply serving the community 24 hours a day, seven days a week.”

A large part of Kalispell Regional Healthcare expenditures are spent on the 20 percent of the population with costly health needs, Spring said. The majority of those patients are on Medicare and Medicaid, meaning the hospital’s reimbursements are limited.

“There are far better ways to address costs then trying to have an energy regulator try and regulate health care,” Spring said. “The last thing we need in health care and business today is additional regulation and regulatory bodies.”

During the bill’s hearing, the commission agreed.

Public Service Commissioner Roger Koopman said he couldn’t imagine adding a new mission to the agency.

Koopman said aside from creating a financial and logistical strain on the agency, the pricing controls would create a “hostile environment” for health-care providers around the state.

Woods said while hospital pricing is just a portion of what’s contributing to larger medical bills, setting regulation is a good start to protect Montanans with medical needs.

“We’ve been using a market model for decades and there is still no wide array of choices,” he said. “There is no price transparency and there is no competition when it comes to hospital care.”

As of Friday, the House Human Services Committee had not taken action on the bill.

Reporter Katheryn Houghton may be reached at 758-4436 or by email at khoughton@dailyinterlake.com.