A hospital bill is almost never a pretty sight. The thick stack of paper and seemingly endless columns of numbers might just be stressful enough to put a healthy person back in the sickbed. More commonly, a bill is likely to cause confusion and raise questions.
However, a recent study showed that hospitals went to great lengths to avoid billing conflicts, queries and audits. And some hospitals weren't shy about using coercive tactics to get patients to acquiesce. The study was led by Kimberly Elsbach, assistant professor of management at the University of California at Davis.
According to the study, hospitals tried to anticipate potential problems and control the impressions given to patients, either making patients feel good about the bill or making them feel frustrated. Either way the intent was to get the patient to stop asking questions and pay up.
Researchers conducted interviews in 1994 and 1995 with patients and staff in the billing departments at three large, urban, not-for-profit hospitals, identified in the study by the pseudonyms Charity Hospital, City Hospital and Hilltop Hospital.
Elsbach's study, co-authored by Robert Sutton, professor of industrial engineering and engineering management at Stanford (Calif.) University, and Kristine Principe, assistant professor of economics at Emory University in Atlanta, was published in the January/February issue of Organization Science, a journal of the Institute for Operations Research and the Management Sciences.
According to the study, the three hospitals used four strategies to avert billing challenges: accommodation, legitimization, intimidation and bureaucratization (See chart). At first, the hospitals tried to show their courteous side, highlighting favors like direct billing to insurance companies or lowering the price of common items like Tylenol, the study says.
"Those tactics get patients to mindlessly pay their bills," Elsbach says. "Hospitals understand the psychology of patients. They know that (overpricing common items is) what patients will look for. They're willing to take a hit on those items of the bill in order to avoid a costly audit."
If playing on patients' positive emotions failed to avert initial challenges, the three hospitals turned to intimidation and bureaucracy. Both Charity Hospital and City Hospital informed their patients that audit requests could sometimes increase their final bills. In addition, the hospitals threatened to send the bills to collection agencies if patients did not pay.
Hospitals also set up bureaucratic roadblocks to fend off patients' questions and complaints. At City Hospital, patients were prevented from speaking to executives. "I'm supposed to take steps to prevent patients from going up the ladder with complaints. . . . I just connect them with another representative," says an informant quoted in the study.
Hospitals tried to prevent audits because they are lengthy and costly, Elsbach says. During an audit, every item on the bill must be cross-checked with other hospital records. What a hospital spends on an audit is usually "above the amount that they would gain," Elsbach said. "It's the process of checking that they wanted to avoid, not that they wanted to take money away from patients," she says.
Hospital billing and finance executives took issue with the findings.
"We are more than happy to comply," says Debra Bloom, director of institutional advancement at Emory Healthcare, which includes 523-bed Emory University Hospital and 419-bed Crawford Long Hospital, both in Atlanta.
"I don't think it's the intention of any hospital financial services department to purposefully mislead or intimidate patients," she said. "The tactics identified in the study are not any which we have designed into our billing system."
Adds Dan Rode, technical director at the Healthcare Financial Management Association in Westchester, Ill.: "I don't view the study as an indictment. Someone could pick up bits and pieces of it and read more into it than there is. It's not a study that can be extrapolated to any larger population than those three hospitals."
Elsbach agreed that the study was not meant to be a comprehensive view of healthcare billing. In addition, she says hospital billing has changed with the surge of managed care. However, since the study was published, Elsbach says she has received about 20 phone calls from people who had similar experiences at hospitals throughout the country.