Why would a patient ditch their preferred hospital? Blame 'surprise' bills.

Hospitals may "lose future patients" if those patients receive a surprise out-of-network bill following an elective procedure at their chosen hospital, according to a study published Monday in Health Affairs that focused on privately insured women who'd given birth in recent years.

Study details

For the study, the researchers from the University of Pennsylvania wanted to learn more about how surprise medical bills affect patients' future decisions about where to receive elective care. Specifically, the focused on whether surprise medical bills deterred new mothers from returning to their preferred hospital.

To understand the issue, the researchers analyzed a sample of medical claims for 63,630 pregnant patients with employer-sponsored health insurance who gave birth twice between 2007 and 2014. The researchers said they chose to focus on pregnant women with employer-sponsored insurance because they are more likely to search for in-network hospitals and in-network obstetricians ahead of time to avoid out-of-network bills.

Findings: New mothers drop preferred facilities for lower-cost care

The researchers found that 11% of the new mothers received a surprise out-of-network bill after their first delivery. These women were then 13% more likely than new mothers who had not received a surprise bill to change hospitals for their second delivery. The study found 19.4% of women who received a surprise bill switched hospitals after their first birth, compared with 16.4% of mothers who did not receive a surprise bill.

Among women who received a surprise bill, the study found women who chose a different hospital for their second delivery were 56% less likely to receive another surprise bill compared with women who returned to their preferred hospital.

Lead study author Benjamin Chartock, an associate fellow at the Leonard Davis Institute of Health Economics at the University of Pennsylvania's Wharton School, explained that cost is part of a "bundle of attributes" that obstetric patients consider when they are choosing a hospital for labor and delivery. According to Chartock, while some mothers might assign more weight to other factors when choosing a preferred facility—like seeing a certain doctor or receiving care at a facility that's close to home—women who received surprise bills during their first delivery are more likely to make cost a main factor when choosing a facility the second time around.

Hospitals 'lose a future stream of patients,' author says

The researchers wrote that the findings indicate that the anticipation of receiving another surprise out-of-network bill can cause hospitals to "lose a future stream of patients," namely new mothers who received a surprise out-of-network bill for their first delivery.

"When someone gets a surprise out-of-network medical bill, they're pretty much helpless to respond at that episode of care," Chartock said. "But for future episodes of care, they do have a choice—they can switch facilities," he said.

Separately, David Silverstein, the founder of brokenhealthcare.org—a patient advocacy group—said the findings show that it's "actually costing the hospital business to have non-participating doctors in the facility." He added, "That's a pretty big eye-opener."

The researchers said the results support a case for more transparency in hospital pricing, which would allow patients to make informed choices about their preferred facility and therefore avoid surprise bills. The researchers added that "patients would benefit significantly from laws protecting them from the damaging financial consequences of surprise out-of-network bills, including those incurred in elective situations," which might also benefit hospitals by preventing the loss of future patients due to the anticipation of surprise medical bills (Bluth, Kaiser Health News, 3/4; Gantz, Philadelphia Inquirer , 3/4; Chartock et al., HealthAffairs, 3/4).

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