Capitol Connection: What is a Facility Fee?

March 25, 2014

The next time you visit your doctor, take a closer look at your bill. Many people may see a new line item – something called a facility fee. These fees are not new, but they are appearing on more bills and are getting a lot more notice in response to some new trends in healthcare.

What exactly is a facility fee? It is an additional fee that patients have to pay when they receive outpatient services from a hospital or hospital-owned facility. These fees cover the cost of the trained support staff, equipment, tests performed on site and other materials or procedures used.

So, why are people more and more shocked to see these fees? And why are people getting frustrated?

One of the main reasons why more people are noticing these fees is that private medical practices are increasingly getting bought by hospitals. Once a private practice becomes a hospital owned practice, they are subject to facility fees.

If a hospital buys your doctor’s office, your doctor may stay the same, the office may look the same, but the costs of care will not be the same because of the added hospital related fee.

Hospitals say that these fees are necessary to cover the higher costs of operating facilities with higher standards required of hospital environments. This means more trained staff, cleaning and sterilization procedures that take time, and access to advanced technology and diagnostics.

In response to the surge in complaints about this often unforeseen fee, state Attorney General George Jepsen proposed legislation this year that would require more disclosure by hospital owned practices about this fee beforehand. This legislation is a good idea, and is aimed at making sure people can expect and budget appropriately for this extra fee.

I recently spoke to a few hospitals, and they all stressed the importance of these fees in covering the costs of care. They also alerted me to another reason why people are often surprised by higher bills when their physician’s office is purchased by a hospital. Many insurance companies charge higher deductibles for hospital care than they do for private practice care. So, once a private practice is taken over by a hospital, patients may be subject to much higher deductibles for the same outpatient care they received before. A higher deductible, plus an added facility fee, translates to sticker shock when you get that first bill.

As the healthcare environment shifts, and hospitals continue to acquire more medical practices, we are bound to face additional questions about care and costs. We have to make sure elected officials constantly look at these consolidation trends, spot problems or confusion, and support legislation to clarify information and protect patients. Quality and accessibility should be the top priorities in healthcare, and we should always strive for transparency throughout the process.