Tuesday, March 12, 2013
Facility Charges
So-called facility charges are back in the news.
They were the subject of the feature article on the front
page of the March 11 issue of The Boston Globe.
When hospitals allow physicians in private practice to see
their outpatients in the hospital they are allowed to charge for the use of
their building and furnishings; i.e., make a facilities charge. This charge is in addition to the physician’s
professional fee.
In recent times many private practice physicians have become
hospital employees. Some of them
continue to practice in what had been their private offices. Hospitals have found that the right to make a
facility fee can be extended to remote locations occupied by employed
physicians and a number of Boston
area hospitals seem to be doing so. Not
surprisingly when self- pay patients or insured patients with large deductibles
see one of these doctors and then get a facilities charge of several hundred
dollars in addition to the usual bill from the physician, they don’t like it.
Following publication of the article on this subject, about
which I wrote a few weeks ago, a number of people sent letters to The Globe
complaining about the practice. The
March 11 article was in response to these letters and reports that various
state regulatory agencies are looking into it.
As a general matter, hospitals that take on private practice
physicians as employees find that the fees those physicians generate following
employment are not enough to cover the salaries committed to at the time of
employment. It seems likely that some
hospitals have seen the facility charge as a way to make up for at least part
of the loss.
There is growing interest in Massachusetts in doing something to restrain
hospital costs. Making facilities
charges may be understandable, but the practice is quite clearly a public
relations disaster and will weaken the hospitals’ negotiating strength in the
cost control negotiations to come.