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Opinion: Mercy Health’s Hardball Tactics to Pay for Their Spending Spree

Mercy Health is on a buying spree. Mercy completed its acquisition of SoutheastHealth in Cape Girardeau, Mo in January, and a month later it announced a plan to acquire Ascension Via Christi Hospital in Pittsburg, Kansas. Now it’s announced a $650 million construction project in Wentzville, Missouri.

You might be wondering how a “non-profit” hospital that refers to itself as a “ministry” can afford this kind of expansion? Surely through philanthropic donations of some kind, right?

Wrong. They extricate it from your paycheck by demanding rate increases from your insurance company, which raises premiums and your co-pays.

They don’t ask kindly, either. Look at what’s happening with Anthem Blue Cross Blue Shield Missouri.

Mercy proactively terminated its contract with Anthem to negotiate higher payments. They reportedly want rate increases six times the rate of inflation for the next two years.

Until they get it, Missourians with Anthem insurance who have doctors employed at Mercy Health must worry if their care will be disrupted. Mercy is hoping that worry will translate into patients calling Anthem, pressuring Anthem into agreeing to higher rate increases. In fact, they’re actually instructing people to call the number on the back of their insurance cards and demand Anthem give them more money.

In other words, Mercy is holding patients hostage to put pressure on Anthem to agree to higher rates.

You might be wondering—so what? Why can’t Anthem just agree to slightly higher rates? What’s the worst that can happen?

One recent study estimated that a one percent increase in healthcare prices caused by a hospital merger—which is what Mercy just performed through acquisitions of two recent facilities—lowers employment by about 0.4 percent. So, for an average-sized hospital that raises its prices by 5% following a merger, over 200 healthcare and non-healthcare jobs would be cut. 5% is far below the rate six times the rate of inflation that Mercy is seeking.

These higher costs are borne by the working class, with the job losses caused by rising health care prices concentrated among low- and middle-income workers who make under $100,000 a year. The arithmetic is that a 10 percent increase in insurance costs for someone making $500,000 scarcely impacts her total compensation but a janitor making $50,000 with the same insurance package is now significantly more costly to employ.

So, Mercy’s expansion and requisite demands for higher reimbursements will cost people jobs. And if you have a job, the higher rates will come right out of your paycheck through higher premiums and co-pays.

Unless, of course, Anthem continues to hold the line.

The only problem with Anthem holding the line is that patient care might get disrupted—something nobody wants. But let’s look closer: Is there really a threat to patient access? Probably not.

Mercy’s behavior fits a growing trend of hospitals using patients as pawns to net higher reimbursements from insurers. An employer representative caught onto this trend and declared “hospitals’ drive for more money leaves patients hanging.” A seniors advocacy organization accused hospitals of taking elderly patients as “hostage” to get paid more.

It’s even prompted leading Washington think tanks to come up with policies lawmakers can consider to “stop hospitals from dumping patients”

At the heart of the matter is a cottage industry of consultants who urge providers pursue an “out-of-network” strategy to get higher payments.

Another way of saying it, it’s a game hospitals are playing with patient’s mental and physical health to feed their own bottom lines.

Someone needs to start asking whether Mercy’s leadership has one of these high-priced advisors pulling the strings. And whether they really need the extra cash. After all, they just posted $115 million in operating income through Q3 this year.