Hospitals face higher costs. Insurance companies must help.

Throughout much of its history, Chesapeake Regional Healthcare has been on solid financial footing. It is important to our patients, and it is important to you.

It takes many specialized employees and clinicians to run a hospital and inflation has made that even harder. Chesapeake Regional is focused on thoughtfully reinvesting and preserving what small margin we do have to serve the local health needs of our community — spending two pennies of an earned dollar today and saving two pennies for tomorrow. However, with skyrocketing labor, drug and supply costs, this has not been possible.

Across the United States, hospitals are facing financial challenges because of economic inflation and the historically high and ever-increasing cost to take care of patients. Community hospitals such as ours continue to be among the hardest hit. We’re at a point where we are asking the hard questions, including: How can we ensure we’re here for the patients and families who depend on us today and tomorrow?

As Chesapeake Regional is trying to solve rising costs, so are many other hospitals across the country. Part of that process is asking for-profit insurance companies to pay their fair share, resulting in more contract disputes between hospitals and insurance companies all over the United States. Why? Because hospitals are holding insurance companies accountable. Because we must. It’s time that health care insurers put the best interest of their members over their profit and start paying hospitals fairly in the face of sharply rising costs. This is why Chesapeake Regional is currently negotiating with Anthem.

To understand why insurance companies are motivated to set different rates with different hospitals, it’s important to recognize that insurance companies are profit-driven. Anthem (Elevance Health) recorded almost $6 billion in profit last year alone. Because the goal of an insurance company is to earn as much profit as possible, the company is incentivized to pay each hospital as little as possible, while still keeping them in-network to offer “choice” and appease their members and their families.

Chesapeake Regional can see from publicly available data that Anthem is paying our community hospital 25% less for the exact same services than other nearby hospitals, even though the cost of staffing, supplies and drugs is relatively the same. Insurance companies such as Anthem often use the size of a hospital as a reason to pay them less, because stand-alone hospitals such as Chesapeake Regional don’t see as many patients as the big systems and therefore, don’t make as much money for the insurance company. Regardless of a hospital’s size, our costs are basically the same. So why should we be paid less for the exact same services, incurring the same costs? We save lives, welcome babies and care for patients the same if not better than other hospitals in our area, and we deserve to be compensated similarly.

Bottom line: We are doing our part to provide care to our community and in the face of the rising cost of patient care, insurance companies must do their part to help ensure nonprofit hospitals such as Chesapeake Regional can continue to be available for our community.

Reese Jackson, JD, MHA,

FACHE, is president and CEO of Chesapeake Regional Healthcare. He is an accomplished health care strategist with more than two decades of progressive leadership experience in diverse health care settings and organizations across the country. He joined Chesapeake Regional in 2016 and has led the health system’s $150 million renovation project.