Amid rising nursing spending, some hospital chains are looking to introduce steep increases in treatment costs which could lead to higher premiums for employers and workers, The wall street newspaper reported Sunday.
HCA Health Inc. (NYSE: HCA) and Universal Health Services Inc. (UHS) are reportedly among hospital operators demanding higher payouts from payers. Neither company has specified the level of price increases they are seeking, The newspaper mentioned.
However, people familiar with the talks say some health care providers want a 7.5% to 15% increase in their prices compared to the 4% to 6% price increases that hospitals typically seek.
Meanwhile, insurer and employer groups are backtracking, pointing out that the most expensive hospital operators, who are typically paid more than five times the rates paid by Medicare, can absorb the costs without a price hike. .
The demands for price increases come as hospital operators grapple with rising nursing costs. According to Premier Inc., a healthcare data analytics firm, the average annual base salary for hospital nurses rose to $86,674 in March from $79,172 in June 2021.
Shares of HCA Healthcare (HCA) tumbled after the company’s first quarter 2022 results last month, as the company, which operates one of the largest hospital chains in the United States, set its full-year guidance below Street guidance amid rising labor costs.
Hospital rates are usually set in long-term contracts with insurers and employers. With some talk of new contracts not expected to start until 2024, the delay will dampen next year’s healthcare costs for some employers. However, some hospitals are reportedly looking to renew their contracts earlier than expected to add price increases.
Hospitals in talks with health insurer Anthem (ANTM) are asking for some double-digit price increases over historical rates, said Bryony Winn, president of contract operations for the company.
Commenting on healthcare provider cost inflation, Sarah London, chief executive of rival managed care provider, Centene (CNC) said on the recent earnings call: “Having our rates contracted creates a buffer at this subject, but obviously aware of the potential future impact.