Consumerism contributing to huge losses for Ascension, Community Health Systems, Tenet and Scripps

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Ascension’s operating income was down 93 percent from last year. Becker’s Hospital Review reports: “Ascension ended the first quarter of fiscal year 2018 with operating income of $11.48 million, down 93 percent from operating income of $172.63 million in the same period of the year prior.”[1] Like others, the company blamed adverse weather for its losses.

Community Health Systems reported a whopping $2 billion loss in Q4 2017. According to Becker’s Hospital Review the large hospital chain blames, among other things, a “$591 increase in contractual allowances and provisions for bad debts.”[2]

Also incurring huge losses, one of the nation’s largest hospital operators, Tenet Healthcare, reported a loss of $367 million in Q3 2017, about 45 times higher than the loss reported a year before. And while Tenet claimed that the losses were due to the hurricanes, according to an article in Dallas News, “for the past three quarters, hospital admissions, inpatient surgeries, emergency department and outpatient visits were all down. Net operating revenue in the hospital operations segment was down nearly 5 percent in the period ending Sept. 30, dropping from $4.04 billion in 2016 to $3.856 billion in 2017.”[3]

And Scripps Health suffered an operating income drop of 94.1 percent from this time last year. The company’s operating income was just $2.4 million in Q1 2018, down from $41.3 million in Q1 2017. According to Becker’s Hospital Review, a Scripps’ spokesperson attributes the mega drop to a three-year Epic installation.[4] Interestingly, when the company unveiled a $30 million cost-cutting plan including layoffs in December 2017, Chris Van Gorder, Scripps president and CEO, said “the cuts are necessary to remain competitive as payers increasingly focus on low prices in contract negotiations and patients with high-deductible health plans shop around for care.”[5]

Let’s recap. Four of the largest healthcare companies in the nation are suffering losses. Weather issues aside, the biggest reasons are people either choose to forego healthcare services because they can’t afford them, or they shop around and go where they can find services for less out-of-pocket. Patients with high-deductible health plans shop around for care. People can’t pay for a $1,000 emergency out of their savings. That’s the price of a refrigerator.

Shopping around is the purest definition of consumerism. Would you rather have an estimate or know exactly what something will cost you? We go back to the Amazon consumer experience. Amazon doesn’t just provide estimates. The retail giant provides a list of items with associated costs and consumers can select what they want.

HealthQRS can provide consumers the same experience in healthcare. We have developed technology that will allow payers and every type of service provider to have an online, health retail marketplace where consumers can shop for services and procedures within their network, see actual costs based on their health plan, select the lowest cost service based on quality, schedule and pay for it all from a smartphone.

With all of the bankruptcies, reorganizations and layoffs, not to mention the huge losses reported by Ascension, Community Health Services, Tenet and Scripps, it’s time for providers to take a quantum leap. Change up the status quo and move to a consumer model. The financial impact to consumers is directly affecting providers. The biggest issue facing hospitals is whether a consumer chooses them and pays the bill. And to survive this, providers must start thinking like retailers. Providers who put consumer experience at the center of an effective strategy will survive.

States are forcing the issue with price transparency legislation. With proposed Senate Bill 154, Kentucky will require pricing transparency from payers and service providers if the bill is passed. A few excerpts from that bill:

  • “Require insurers to establish an interactive mechanism on a publicly accessible Website that enables covered persons to obtain information about amounts paid for health care services by their insurer and a good-faith estimate of out-of-pocket costs for a nonemergency health care service”[6]
  • “Require contracts with participating providers to include a clause requiring the provider to provide sufficient information to covered persons for the person to receive a good-faith estimate pursuant to the Act”[7]

We applaud the move by Kentucky to require price transparency. And we still say that estimates, even in good faith, are not enough. We can do better than estimates because the technology exists that will allow payers and providers to provide actual costs. So why not give people what they really want to know: how much is this going to cost me?

As a provider, what are you doing about patients who delay procedures with a $500 or higher price tag? What are you doing about the increasing competition from mergers, acquisitions, disruptions like CVS and Aetna, the new approach by Amazon, Berkshire Hathaway and JPMorgan? Competition is hitting you from all sides, whether it’s people who can’t pay and defer services, people who use your services and don’t pay, or other providers taking your business.

We suggest you give your patients options and you start right now. The solution is HealthQRS. We can help you offer people a total e-commerce platform that has your business rules built in. You can even offer terms or build in a loan. You can do this if you partner with HealthQRS. We can help you starting today with just a low monthly fee because we offer our solution as a software as a service (SaaS), so there’s no capital investment.

We have over 12 years of experience developing healthcare retail experiences for people and our founders have over 50 combined years of e-commerce experience. Our E-Commerce Medical Marketplace Flyer provides more information. Click here to download the flyer. We invite you to contact us right now for more information or click here to schedule a demo.

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[1] Ayla Ellison, “Ascension’s operating income sinks 93% in Q1,” Becker’s Hospital Review, Dec. 11, 2017, https://www.beckershospitalreview.com/finance/ascension-s-operating-income-sinks-93-in-q1.html

[2] Ayla Ellison, “CHS sees Q4 net loss widen to $2B,” Becker’s Hospital Review, Feb. 28, 2018, https://www.beckershospitalreview.com/finance/chs-sees-q4-net-loss-widen-to-2b.html

[3] Sabriya Rice, “Tenet Healthcare reports a quarterly loss that’s 45 times higher than last year,” Dallas News, Nov. 6, 2017, https://www.dallasnews.com/business/health-care/2017/11/07/tenet-healthcare-reports-quarterly-loss-45-times-higher-last-year

[4] Morgan Haefner, “Scripps Health’s Q1 operating income drops $38.9M: 4 things to know,” Becker’s Hospital Review, Feb. 9, 2018, https://www.beckershospitalreview.com/finance/scripps-health-s-q1-operating-income-drops-38-9m-4-things-to-know.html

[5] Ibid.

[6] R. Alvarado, SB154, Kentucky Legislature, http://www.lrc.ky.gov/record/18RS/SB154.htm

[7] Ibid.

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