How Facility Fees Hurt Private Practices & Solutions for Physicians

Understanding the Impact of Facility Fees and How to Combat Their Effects

Unmasking the Impact of Facility Fees: A Call for Fairness in Healthcare Billing

The rising cost of healthcare is an ongoing concern, and hidden fees contribute significantly to this problem. One such fee, often overlooked but highly impactful, is the facility fee that hospitals charge for outpatient services. Independent physicians face an unfair playing field since private practices cannot levy these charges, limiting their revenue potential and threatening their autonomy.

What Are Facility Fees and Why Do They Matter?

Facility fees are additional charges imposed by hospitals to cover overhead costs for outpatient procedures performed within their facilities. While intended to offset the expense of maintaining hospital infrastructure, these fees often inflate patient bills significantly, making hospital-based outpatient services far more expensive than comparable services provided in a private practice. For instance, a minor procedure that costs $200 in an independent physician's office could exceed $1,000 when conducted at a hospital due to added facility fees.

The Toll on Private Physicians

Private practices struggle to compete with hospitals that can charge facility fees for the same services. This disparity results in several challenges for independent physicians:

1. Revenue Limitations: Without the ability to charge facility fees, private practices earn less for outpatient services, reducing resources for reinvestment and growth.
2. Acquisition Pressure: Financial strain forces many independent practices to sell to hospitals or join larger health systems, leading to a decrease in physician autonomy.
3. Patient Access Issues: Patients may be driven toward hospital-based care due to insurance network restrictions or the perceived necessity of hospital facilities for routine services, leading to higher healthcare costs overall.

Potential Solutions to Level the Playing Field

To address the negative impact of facility fees on independent practices, the following solutions could help:

• Legislative Reform for Equitable Reimbursement: Lawmakers should consider legislation that eliminates facility fees for services easily provided outside hospital settings or provides alternative reimbursement structures for private practices to compensate for the inability to charge facility fees. A uniform reimbursement model could ensure fair payment for all outpatient services, regardless of the setting.
• Strengthening Advocacy and Physician Coalitions: Independent physicians need stronger representation to counterbalance hospital lobbying efforts. Forming coalitions or joining existing advocacy groups can amplify physicians’ voices, pushing for regulations that promote billing transparency and payment parity across healthcare settings.
• Adopting Alternative Practice Models: Concierge medicine and direct primary care offer solutions for physicians to maintain independence by directly charging patients a flat fee for comprehensive services. Although not ideal for all specialties or patient demographics, this model can help offset revenue loss due to facility fee limitations.
• Optimizing Revenue Cycle Management (RCM): Independent practices can adopt advanced revenue cycle management solutions to ensure accurate billing, reduce claim denials, and optimize collections. Partnering with an experienced RCM provider like Medrina Technology Management can help private physicians secure more revenue from existing patient volume by focusing on efficient claims processing and denial management.

Our Approach: Empowering Private Practices

At Medrina Technology Management, we understand the unique challenges that hidden fees and facility charge disparities pose to independent physicians. Our comprehensive suite of revenue cycle management services offers tailored solutions, including:

• Billing and Collections Optimization: Streamlined processes that ensure timely and accurate submission of claims, appeals, and collections to maximize revenue.
• Denial Management Expertise: Identifying root causes of denials and implementing corrective actions to recover lost revenue.
• Compliance and Regulatory Support: Staying ahead of the ever-changing healthcare regulations to ensure practices remain compliant, avoiding unnecessary penalties.

By taking control of the revenue cycle, independent physicians can minimize the financial impact of facility fees, allowing them to focus on patient care without sacrificing autonomy.

Conclusion: The Path Forward

Hidden fees such as facility charges represent a significant barrier to the sustainability of private medical practices. As the healthcare landscape continues to evolve, private physicians must actively seek solutions that protect their financial viability. Whether advocating for policy change, exploring alternative practice models, or optimizing their billing processes, the time for action is now.

Medrina Technology Management stands ready to support private practices in navigating these challenges, providing tools and expertise to maximize revenue and maintain independence. Contact us to learn how we can help your practice overcome hidden fees and thrive.