Dr. Rutherford says cost shift complicates state’s cost growth benchmark

April 28, 2022

Confluence Health CEO Dr. Peter Rutherford told the Health Care Cost Transparency Board last week that Confluence’s hospitals needed increases in its commercial rates to sustain its operations, since there are either low and no payment increases from Medicare and Medicaid. He said the issues of cost shift make it difficult to achieve the 3.2 percent spending growth limit that the Board has adopted for 2022.

Speaking during the Board’s public comment period, Dr. Rutherford said, “…given our payer mix…for Confluence Health to see a 3.2 percent revenue increase to cover budgeted increase costs and maintain [its]…operating margin, health care commercial rates must increase by 6.55 percent.”

Prior to Dr. Rutherford’s statements, WSHA, WSMA and their members on the Board’s advisory committee sent a letter (April 15, 2022) asking the Board to consider the value of a health care service, not just its cost, when it selects areas for cost control. The committee’s WSHA representative, Overlake CEO Mike Marsh, and the WSMA representative, University of Washington Medical Director Dr. Mika Sinanana made similar comments during the monthly meeting.

The Board has not responded to the WSHA/WSMA letter or Dr. Rutherford’s comments. At its April 20 meeting, the Board discussed its new role in monitoring primary care spending. The legislature gave the Board this new mandate this past session on the theory that increases in primary care spending may be one means of lowering overall spend. The Board also heard about the benefits of value-based purchasing.

Created by the legislature in 2020, the Board meets monthly with the charge to monitor growth in health care spending and recommend measures for cost control.



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