EP279: How Did Health Systems Get Addicted to the Inflated Prices They Charge Employers and Some Patients? With Peter Hayes, President and CEO of the Healthcare Purchaser Alliance of Maine

In this Episode 279, Stacey Richter talks with Peter Hayes, president and CEO of the Healthcare Purchaser Alliance of Maine, about how health systems got addicted to the inflated prices they charge employers and some patients. WHAT YOU'LL LEARN ✅ Why profit for a hospital has to come largely from commercial payers, not public pay ✅ Why most hospitals don't use real cost accounting and, in many cases, genuinely don't know their own costs ✅ How cost shifting from public to commercial payers affects employers and employees ✅ Why bundled payment programs offer a path away from inflated commercial pricing ✅ What employers can do locally to become market makers instead of market takers WHY THIS MATTERS Peter Hayes argues that health systems didn't arrive at today's inflated commercial prices by accident — someone wanted them to operate that way, and following the money reveals who. With hospitals often lacking real cost accounting, employers and their employees end up absorbing costs shifted away from public payers, while executive pay and inefficient purchasing go largely unexamined. Hayes's central point: it will take a village — employers shopping around for better benefit designs, purchasers organizing collectively, and everyone refusing to just accept the bill as given — to make it untenable for health systems to keep operating this way. MENTIONED IN THIS EPISODE 🔗 EP257, with Karl Bilimoria, MD === LINKS === 🔗 Show Notes with all mentioned links: Episode Page 🔗 Healthcare Industry Acronyms and Terms ✉️ Enjoy this podcast? Subscribe to the free weekly newsletter 🫙 Support the podcast with a small donation to the Tip Jar 📺 Subscribe to our YouTube channel 🎤 Listen on Apple Podcasts 🎤 Listen on Spotify === CONNECT WITH THE RHV TEAM === ✭ LinkedIn ✭ Threads ✭ Bluesky ✭ X 00:00 Introduction 03:36 Why employers are spotting the margin from commercial pay. 05:20 Public pay vs commercial pay, and why profit for a hospital has to come from commercial payers. 05:51 Inefficient costs in health systems. 07:22 How the health care system evolved this way. 09:12 "If you're a business, a manufacturer, you actually do cost accounting. … Hospitals don't use cost accounting. They really don't know." 12:00 The amount that taxpayers are actually subsidizing hospital systems. 12:24 Cost shifting and how this is affecting employers and employees. 14:45 How a hospital could increase its employer prices by such a large magnitude. 17:19 The perverse incentives that have made health plan premiums what they are today. 22:11 The case for the bundled payment program. 23:35 How purchasers shopping around for benefit designs can transform health pricing and make hospitals more willing to move from fee-for-service to bundled payments. 24:54 EP257 with Karl Bilimoria, MD. 25:46 Employers outside of the health care industry vs the health care industry, and how this plays out in state and federal legislature. 27:26 What else employers can be doing. 29:09 "Instead of being market takers, [it's time] to be market makers." 29:47 What employers can be doing at the local level. 34:30 Employers can find a transparent health broker by checking out Health Rosetta and Validation Institute. 35:17 "If we don't do something to have the market work, it's going to be done to us."