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84 CFO / FINANCE 8 of the Most Memorable Quotes About Hospital Prices By Brooke Murphy H ospital pricing has drawn increased scrutiny from parties with- in and outside the healthcare industry as patients experience higher out-of-pocket costs. Hospitals consider a confluence of economic, political, geographic and social factors when setting prices for healthcare services, making it dif- ficult for officials to explain variance in prices. Below are eight statements from hospital and industry professionals that illustrate the complicated and politically fraught dialogue sur- rounding hospital prices. 1. "e chargemaster is complete nonsense that really doesn't mat- ter — unless you are an uninsured person and you're getting these huge bills driving you toward bankruptcy. e biggest irony of the U.S. healthcare system is that only the uninsured — oen people who don't have a lot of money — are the only ones the hospital expects to pay these incredibly inflated prices!" — Robert Laszewski, president of Health Policy and Strategy As- sociates. From "Hospital Prices No Longer Secret As New Data Reveals Bewildering System, Staggering Cost Differences" via e Huffington Post (May 2013) 2. "Hospitals are self-fueling, ever-expanding machines. ere is an infinite amount of stuff to buy — amenities, machines, new wings, higher salaries, more nurses. If you pay hospitals more, they spend it. If you pay them less, they adjust. e only way to pay less for healthcare is to pay less for healthcare." — James Robinson, PhD, economist and professor of health policy at the University of California, Berkeley. From "As Hospital Prices Soar, a Stitch Tops $500" via e New York Times (December 2013) 3. "We [hospitals] cannot be compared to an independent doctor who can just overtly select who they see. We take everybody. at re- quires cost-shiing that is so emblematic of this industry." — Joe Piemont, former president of Carolinas HealthCare System in Charlotte, N.C. From "Prices Soar as Hospitals Dominate Can- cer Market" via e Charlotte Observer (April 2015) 4. "ere's more price transparency and quality transparency regard- ing a refrigerator than there is about your heart surgery." — John Toussaint, MD, CEO of ThedaCareCenter for Health- care Value in Appleton, Wis. From "Why Some Health Systems Aren't Systems At All: Q&A with Dr. John Toussaint, CEO of Thedacare Center for Healthcare Value" via Becker's Hospital Review (April 2014). 5. "We lose money on 60 percent of what we do, and we actually gen- erate a margin on 40 percent of what we do. In aggregate, hopefully, we break even or have a 1 or 2 percent margin at the end of the year. e things that we get overpaid on allow us to do the things that we get underpaid on." — David Torchiana, CEO of Partners HealthCare in Boston. From "Partners CEO Makes His Pitch" via CommonWealth Mag- azine (April 2016). 6. "Although many factors influence [hospital] pricing, it is clear that inadequate competition between providers contributes significantly to this variation." — Liam Sigaud, analyst at Maine Heritage Policy Center. From "Study Finds Wide Disparity in Maine Healthcare Costs" via Maine Center for Economic Policy (April 2016). 7. "Hospitals face economic pressures of all sorts. Overhead is a huge piece of it [pricing], as well as types of services. If one hospital has a trauma unit and a burn unit, it'll have a higher cost structure than one that doesn't have that high level of specialty services." — Jan Emerson-Shea, vice president of external affairs for the California Hospital Association. From "Two Halves of California \Have Wide Gap in Health Costs" via e Sacramento Bee (Sep- tember 2015). 8. "ere is no method to this madness. As we went through the years, we had these cockamamie formulas. We multiplied our costs to set our charges." — William McGowan, former CFO of the University of Califor- nia Davis Health System in Sacramento. From "e Pricing of U.S. Hospital Services: Chaos Behind a Veil of Secrecy" via HealthAf- fairs (January 2006). n UPMC Gets Financial Boost From Insurance Division By Ayla Ellison P ittsburgh-based UPMC said revenues increased 5.8 percent year over year to $12.8 billion in fiscal year 2016. That boost was primarily attributable to membership growth in the system's health plan. In financial documents released Aug. 26, UPMC said membership in its health insurance division was up more than 8 percent in FY 2016, which ended June 30, com- pared to the year prior. As of July 1, membership in UP- MC's insurance division was nearly 3 million. UPMC ended fiscal 2016 with operating income of $310 million, down from $384 million in FY 2015. The system recorded a one-time gain of $233 million in FY 2015 related to Evolent Health's initial public offering. UPMC co-founded Evolent with The Advisory Board Company in 2011. The company helps healthcare pro- viders develop their own health plans and set up val- ue-based payment contracts. UPMC reported an operating margin of 2.4 percent in FY 2016, compared to an operating margin of 3.2 percent in the year prior. n