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.

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