Raising a rumpus: Wells Fargo's preferred provider

Neil Davis writes the Dose of Reality column for The Ester Republic, and seems to have raked up a bit of muck this month. Wells Fargo is the state's new health care/insurance administrator, and recently sent out an announcement indicating that it had entered into a preferred provider agreement with Alaska Regional Hospital in replacement of the one the state formerly had with Providence Hospital, because it would be cheaper.

Well, this caught Neil's eye because he'd done some cost-comparison research on these hospitals for his book, Mired in the Health Care Morass. The crucial piece of information here is that Alaska Regional is a for-profit hospital, whereas Providence is, like Fairbanks Memorial Hospital, a nonprofit hospital—and markups at for-profit institutions can be significantly higher than nonprofit institutions. So he looked into it, and sure enough, it appears that's still the case for Alaska Regional. Generally speaking, procedures at this hospital tend to be more expensive or about the same as those at Providence.

So why would Wells Fargo claim that it's the other way around?

One possibility is that it IS cheaper—for Wells Fargo. The companies could have a steep discount for their payments. This does not mean, however, that it is any cheaper for the patients who are getting their care there, or for the state of Alaska.

Neil rightly raises these questions, and suggests that they be looked into. I agree.