BISMARCK, N.D. - Insurance Commissioner Jon Godfread today issued a statement in response to the press regarding former Sanford CEO being paid more than $49M last year.
“I understand and respect the right of private nonprofit hospitals to make their own financial decisions. To that end, Sanford Hospital has long held the highest executive and physician pay among its North Dakotan competitors. We highlighted this (on pg. 27) in our Healthcare Cost Study linked here: Healthcare Cost Study
“At the same time, Sanford also had a steady decline of financial assistance to our consumers who need it most (pg. 26 Healthcare Cost Study). These financial decisions do not happen in a vacuum and have dramatic impacts on the consumers in our region. The data clearly shows several warning signs in the North Dakota market. Hospitals in our region have shown to have expenses and revenue growth that has significantly outpaced the national average, often placing North Dakota in the top 5 nationally in those categories.
“We cannot ignore the impact those decisions have on our consumers. Significant hospital expenses, such as astronomical CEO payouts, cause hospitals to demand higher reimbursement rates from our insurance companies, who are then forced to demand higher insurance premiums from our consumers. Our mission at the North Dakota Insurance Department is to continue to educate and protect the consumers of this state and thus, I look forward to continuing to work with the Legislature, the Governor’s Office, our healthcare community, and all our stakeholders to truly address health care policy solutions that help lower costs for every North Dakotan.”
Background: The Healthcare Cost highlighted several important issues in the North Dakota Hospital market including:
- Hospital Utilization. North Dakota has seen an increase in hospital usage. North Dakota Hospitals are seeing longer hospital stays than the national average, and utilization is growing faster in North Dakota than the rest of the country.
- Hospital Expenses. Hospital Expenses are ranking higher than the national average (usually top 5) and continuing to grow at higher than national average rates (also top 5 rankings).
- Hospital Operating Revenue. North Dakota Hospitals are seeing high revenue and high revenue growth.
- Medicare Revenue. Medicare revenue is also very high and growing for North Dakota Hospitals.
- Hospital Reimbursement. Private hospital reimbursement based on Medicare rates grew from 170% of Medicare rates in 2010 to over 200% percent of Medicare rates in 2018.
- Prospective Payment System (PPS or Large Cities) Hospitals vs. Critical Access Hospitals. Critical access hospitals appear to be reimbursed at a much lower rate (149% of Medicare) than PPS hospitals (211% of Medicare).
- Premiums. North Dakota insurance premiums are largely average as compared to the national average.
- Claims. Insurer claims are averaging slightly higher than the national average and are growing higher than the national average.
- Administrative costs. Insurer administrative expenses remain low, but administrative expenses are growing at a very fast rate.
The full study and/or an executive summary is available on our website at insurance.nd.gov or here:
For more information, visit insurance.nd.gov or contact the Insurance Department at (701) 328-2440.