Hospital and health system bankruptcies and closures continue to rise in the United States. They are troubling news not only for patients and communities but also for insurance companies. Hospital closures often lead to higher costs for insurers due to increased claim denials, delayed payments, reduced provider network and access to care, higher out-of-network costs, and a disruption of our healthcare system. These factors ultimately impact the health insurance companies’ bottom lines as well as their ability to manage patient care effectively with the risk of causing customer/patient dissatisfaction. Insurance companies can help prevent hospital closures, especially in rural areas, by implementing some of the following mechanisms: timely and adequate payments; improved patient-centric payment systems; and standby capacity payments to cover minimum fixed costs. Such early strategic investments have the potential to offset the higher costs for insurance companies associated with hospital closures and improve the sustainability of the U.S. healthcare system.
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