“Persistence and resilience only come from having been given the chance to work through difficult problems.” — Gever Tulley
Hospitals exist to save lives and improve health. Every day, across every ZIP code in Michigan, our community hospitals are the place where babies are born, cancer is fought, lives are saved and families turn in their most vulnerable moments for hope, help and healing.
Nearly every Michigander has a story about a provider, nurse or physician whose care brought them peace and support during one of their most difficult moments. Which is why it’s so disheartening to see recent headlines that cast hospitals as profiteers rather than what they truly are — the lifeblood of our communities, doing everything possible to ensure access to high-quality, compassionate care.
Healthcare providers use every option to make sure patients receive the care they need in the right setting, regardless of their ability to pay. While public dialogue about healthcare affordability is vital, we cannot disregard the complexity of drug pricing, payment models and hospital care itself in these conversations.
One of the most common misconceptions about healthcare costs is that hospitals are profiting by inflating prescription drug prices, but hospitals do not manufacture drugs nor set their list prices. They purchase and administer these drugs, often under the most difficult circumstances in intensive care units, cancer infusion centers or operating rooms. A vial of medicine isn’t just handed over: it’s carefully stored, handled, prepared and delivered by an entire team of trained professionals with the expertise to ensure the right drug gets to the right patient at the right time.
That process involves significant investment in safety, staffing, technology and compliance — not to mention the rising labor and supply costs all hospitals across the nation are facing. In fact, labor costs are up 45% since 2014, compared to a 28% increase in inflation. These expenses are especially heavy for hospitals in rural or underserved areas, where resources are stretched thin but commitment to care cannot and will not waver.
It’s also important to note what hospitals charge is completely different from what a hospital is paid, and it’s certainly not what most patients pay. Nearly all Michiganders have health insurance, and insurance plans negotiate rates with hospitals that are often far lower than the list price. In fact, hospitals are price takers, typically collecting only a fraction of the charges listed on publicly posted pricing files: files that are shared in the name of transparency, even if those figures are easily manipulated to be taken out of context.
Moreover, hospital care isn’t one-size-fits-all. Treatment decisions are based on a patient’s specific condition, care setting and coverage. Drug prices can vary based on location, the severity of a patient’s condition, who is covering the cost of care—whether it’s private insurance, Medicare, Medicaid or the patient themselves—as well as dosage and method of administration. A medication delivered through an outpatient clinic may have vastly different requirements (and prices) than one used during an inpatient stay after surgery or trauma. Comparing these prices without explaining that nuance, as well as the frequency of use causes confusion, not clarity.
Despite these challenges, hospitals are actively working to make care more affordable. Michigan hospitals have embraced the use of biosimilars and generics, participate in discount programs and offer financial assistance for uninsured patients. Hospitals actively invest in community health, run outreach clinics and help patients access the medications and services they need to thrive. This is all despite the fact that Michigan is one of only four states in the country where hospitals had, on average, a negative margin, according to the Kaiser Family Foundation.
Every hospital in Michigan is part of a larger effort to strengthen our healthcare system — not just for today’s patients, but for future generations. We are employers, safety nets, disaster responders and anchors of trust. If hospitals close due to financial challenges, where will patients in those communities turn when they need lifesaving care?
Of course, affordability matters. But solutions should be rooted in partnership. We welcome conversations about how to increase transparency, reduce costs and improve care.
Michigan hospitals are essential to the solution and will be the first at the table to offer collaboration, just as we are the first place Michiganders go when they need life-saving care.
As always, I welcome your thoughts.