Hospitals Discourage Consumer Questioning Of Bills, Study Suggests

March 11, 1998

Certain hospitals regularly use tactics, some friendly and some threatening, to discourage patients from inquiring about their bills, according to an article in this month's edition of a journal published by the Institute for Operations Research and the Management Sciences (INFORMS).

The study, part of a broader analysis of what scholars call anticipatory impression management, is based on data collected at three non-profit hospitals in a single urban area. The hospitals asked that their names not be disclosed. The researchers' conclusions are based on bills, letters, observations, and interviews with hospital staff and patients. The researchers began their work in 1994, approximately six months after a series of critical articles about hospital billing led to a surge in inquiries to the three hospitals.

"Citizens are becoming more educated about hospital billing and taking the responsibility of insuring that their charges are correct," said the principal author of the study, Dr. Kimberly D. Elsbach of the Graduate School of Management, the University of California, Davis. "Hospitals are countering that with their own efforts to discourage people from becoming involved with challenges or audits because it costs them a great deal of time and money."

The study shows that hospitals may discourage inquiries into bills by putting on a friendly face in their initial correspondence and conversations with patients. Those patients who actually call for an audit of their bills may meet what amounts to explicit hostility.

Using Threats to Avert Challenges to Bills

The study's most disturbing finding was that some hospitals try to prevent patients who call from launching a formal investigation of their bills by using intimidating images filled with threats. The threats are aimed at distracting consumer attention and evoking fear, even intimidation. These can include the threat of sending a bill to a collection agency if payment is not made promptly or the threat to increase the charges. One hospital customer service representative told the researchers, "Patients are informed that audits of bills can go either way. Some charges may not have been posted and were inadvertently left off the bill. If there are charges that should be added we add them. We've had lots of patients come in on the short end of the stick [after such an inquiry]."

Hospitals also may use bureaucratic images designed to produce roadblocks that overwhelm consumers and invoke frustration, said the study. The goal is to persuade patients to give up on formal inquiry. One employee said, "I'm supposed to take steps to prevent patients from going up the ladder with complaints. I'm not allowed to give out administrators' phone numbers. I just connect them with another representative."

The study found that the hospitals' tactics were often successful; more often than not, the hospitals didn't need to act on their threats.

Averting Initial Challenges

In their initial contacts with patients, hospitals can use accommodating images filled with goodwill and descriptions of favors they have done for patients in an effort to diminish consumer attention, said the study. An example of such a written or verbal communication with a patient about a bill would be, "[The hospital] is pleased to provide you with an itemization of charges you incurred during your hospital visit. [The hospital] bills your insurance company as a courtesy to you."

Hospitals also may use images that legitimate their billing practices to diminish consumer attention and invoke patient acceptance and prompt payment, said the study. Thus, they make common items on the bill appear more reasonably priced and format their bills like those of credit card companies and other organizations that have consumer acceptance. They also include enough technical information in bills to make patients comfortable with their charges - but not enough to flag suspicious charges. An example of such a customer service reply would be, "One thing we do not have is an aspirin that costs $1.50. We try to make all generic items like Tylenol or Maalox cost close to market value."

The study's broad purpose was to observe anticipatory impression management - using tactics to avert potentially costly problems, often at the customer service rather than the public relations or marketing level of an organization.

Anticipatory impression management is used in other industries as well. Among the study's conclusions were that (1) these preemptive actions may help organizations avoid the need for more public and risky forms of impression management; (2) negative images, in some cases, may actually be beneficial to organizations; and (3) organizations sometimes use anticipatory impression management to avoid accountability and responsibility for their actions.

The findings in the study echo some results of the "1998 American Customer Satisfaction Index (ACSI)" published in the February 15, 1998 issue of Fortune. Hospitals, along with airlines and news casting, were at the bottom of the Fortune index. Hospitals as an industry had only a 67% satisfaction rate, which was a 5.6% drop from the previous year.

The study, "Averting Expected Challenges Through Anticipatory Impression Management: A Study of Hospital Billing," was written by Dr. Elsbach, Dr. Robert I. Sutton of Stanford University, and Dr. Kristine E. Principe, formerly of Emory University, Atlanta. It appears in the current issue of the journal Organization Science, a publication of INFORMS.

The Institute for Operations Research and the Management Sciences (INFORMS) is an international scientific society with 12,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work primarily in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, the stock market, and telecommunications. ***

Institute for Operations Research and the Management Sciences

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