Carl Armato is the President and CEO of NovantHealth, Inc. He is one of the few CEOs who actually keep their employees informed about his views about the company and how it is run. This article written by him, for the employees of Novant, is reprinted with his permission and with credit to Paul Harvey.
FoodMed Regional Grocery Center
Trying to explain how hospitals are paid for their services is a daunting assignment. Few if any businesses are paid for their products or services in the same way as a hospital.
Several decades ago radio personality Paul Harvey explained what it would be like if other companies were paid like hospitals. Novant staff have updated the comparison below, using a grocery store as the example. I hope you find this insightful.
It’s your first day on the job as checkout cashier for FoodMed Regional Grocery Center. Four customers have lined up with their carts at your cash register. Here’s what happens.
Customer #1 gathered $100 of groceries. She tells you that she will pay only $85. You tell your manager about this odd situation, but she frowns and informs you that the store is powerless. And because she bought lima beans and cod, you must call a jammed 1-800 number to get approval to sell her these items. (Medicaid)
Customer #2 heaps his cart full of groceries. Because he stayed in the store longer than two hours, he can take as much food as he wants to, but you can only charge him $90. Four of 10 customers pay for their groceries “by the cart,” so you pray that an equal number of appetite-suppressed customers shop at your store as do hungry people to balance things out. For this same group of customers, if your store spent any money on advertising, legal fees and community education, the customers who shopped in your cereal and canned goods section can deduct these types of expenses from their final bill because they don’t believe your store needs to spend money on that kind of stuff. In addition, if you allow customers to use your store phones, as a convenience for local calls, you must conduct an audit that determines what portion of your total phone bill is attributable to this nice gesture by your store. And those customers mentioned above can also deduct that telephone cost from their food bill. (Medicare)
Customer #3 also has $100 of groceries, mainly bread, milk, vegetables and other foods essential for good health. She cannot afford to pay even $5. Your store believes it’s important to help those in need, so you inform her that the groceries today are free. (Uninsured with low-income)
Customer #4 buys $100 of groceries. You’ve been instructed to charge this fourth customer $140 because the first three customers did not fully pay their bills. The customer pays you a small amount; your store must collect the remainder of the bill later on, typically waiting 60-90 days for payment. These customers that you are overcharging are getting madder and madder, and several are refusing to make up the difference. One even launched a media campaign to put pressure on your supermarket so you would lower its prices, too. (Commercial insurance)
Based upon these confusing payment scenarios, you can see why the healthcare industry is working to transform itself. On a final note, each of the four customers described above, regardless of his or her ability to pay, deserves remarkable service from highly skilled employees and partners.