Revenue Determination: Pricing and Contracting

Over the last twenty years health care prices for the general public, because of this continuous rise in prices hospitals and health care facilities have given much attention to improving their communication of prices to the public. Most people of the general public are unaware that hospital costs and hospital prices are two different things. Hospital cost is the dollar amount the hospital pays in order to provide patient care. Hospital price is the dollar amount designated to the specific procedures performed in order to provide said “patient care”. This dollar amount is what the hospital bills the insurance company and/or the patient for their care (Cleverly & Cameron 2007). It is important for health care facilities and hospitals alike to provide a sense of reasonableness within their bills so that their patrons do not get the feeling that they are being “ripped off”. Many people feel that the reason their health care bills are so high is because hospitals feel they can charge whatever they want for a product people have to have. In general, sick people will not turn down a life saving treatment because it is too expensive, because the health care industry is aware of this, they charge whatever price they can get away with, like charging the patient’s insurance three times the base price (Cleverly & Cameron 2007). What the general public always seems to overlook is the fact that even hospitals need to turn a profit in order to keep their doors open and keep providing genuinely good health care to their patients.

There are three generic factors that influence the way any firm, including health care facilities influence their pricing. These three factors are, the desired net income of the firm, the firm’s competitive positio...

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...They are held to “reasonableness of charges” and it is important that the public knows the facts before speaking out against their local hospital. Health care costs money, therefore like any business hospitals must charge for their services, plain and simple.

Works Cited

Devers, K, Casalino, L, Rudell, L, Stoddard, J, Brewster, L, & Lake, T. (2003). Hospitals negotiating leverage with health plans: how and why has it changed? Health Services Research, 38(1), 419-446.

Cleverley, W. O., & Cameron, A. E. (2007) Essentials of health care finance. Mississauga, Canada: Jones & Bartlett

Long, R. (2002). Long: financial turnaround focuses on revenue cycle, managed care contracts - executive insights - ronald r. long, outgoing chairman of healthcare financial management association national board of directors - interview. Healthcare Financial Management