Tower Health lowers charges
Effective Dec. 1 reductions average about 30 percent at 5 area hospitals
WEST READING >> In what it calls an “unprecedented move,” Tower Health has lowered charges at five of its six hospitals for a wide range of services, procedures, tests, medications and supplies.
The cost changes, which became effective Dec. 1, have been implemented at Brandywine, Chestnut Hill, Jennersville, Phoenixville, and Pottstown hospitals.
The reductions average approximately 30 percent, according to a press release, and are aimed at making the hospitals more competitive within the market.
As a result of the changes, patients may notice lower out-ofpocket costs, depending on their insurance coverage.
“We focus on a relentless pursuit of excellence in all we do. Quality of care comes into that. We want to provide access to care and we want to assure we have the right charge structure,” Tower Health President and CEO Clint Matthews said in an interview Monday. “So as we look at value — it’s quality over cost. We also want to be a good partner with communities, employers, insurers and patients.”
Matthews said that taking a look at charges at the five hospitals was an area identified as part of the due diligence process prior
to completion of the acquisition of the five hospitals in 2017.
“It’s a normal process that hospitals do to look at charges to make sure inpatient and outpatient charges are aligned. It was specifically an area to look at for these five hospitals,” he said. “We see it as a demonstration of our commitment to be a trusted partner.”
Charges for Reading Hospital in West Reading are already consistent with the regional market, according to Tower Health, and will not change.
“We had done a review at Reading in the past so we knew it was competitive from a pricing perspective,” Matthews said.
A third-party reviewer was brought on early in 2018, according to Matthews, to take a look at the charging structure at each of the hospitals. The “charge master” at each hospital was analyzed and compared against other hospitals in the region. The charge master is the database of charges for every service, test, procedure, supply or medicine that a patient might experience at the hospital, according to a press release.
“While hospitals rarely receive full charges as reflected in the data base, a hospital’s charge master often sets the baseline from which payor contracts are negotiated, and they can also influence out-of-pocket costs for patients,” the release stated. Matthews said that given the number of plans and employers, there is not a standard amount in out-of-pocket reduction a patient might see. However, he used an example from Brandywine Hospital for the cost of a chest X-ray.
The old price for a chest X-ray at Brandywine was $598, according to Matthews, while the new price is $327 — a 45 percent reduction in the price for that specific service.
“After the plan rate, reimbursement and co-pay, the average savings to the member is $32.50 for that service at Brandywine,” he said, adding that for individual patients, the reductions, “mean their health care dollar will go farther.”
Tower Health projects that the lower charges will reduce its gross revenue calculations by approximately $1.69 billion across the five hospitals.
Tower Health has notified insurance companies about the reductions in the hospitals’ charges. Existing insurer contracts with Tower Health remain in effect, and Matthews said he does not anticipate any renegotiation of contracts with insurers.
The acquisition of the hospitals from Franklin, Tenn.-based Community Health Systems Inc. was announced in May 2017, and became effective Oct. 1, 2017.
The former Reading Health System expanded beyond it Berks County footprint with the acquisitions — renaming itself Tower Health.
Tower Health’s purchase of the hospitals cost the health system approximately $418 million, according to information filed with the Securities and Exchange Commission by Community Health Systems Inc. in Nov. 2017. The filing stated that the purchase price was paid in cash at the deal’s closing on Sept. 29, 2017.