Time to Stop “Calling it Reimbursement”

Health Policy Oct 6, 2026• By JEFF GOLDSMITH Back during the Jurassic period, at the beginning of my consulting career, senior colleagues at Ernst and Whinney took me to lunch to explain to the newby the facts of life in healthcare finance. The biggest takeaway from that long ago conversation: the entire history of hospital finance was built up on the revenue side. Managing costs was simply too challenging for most C-suites, because it inevitably required involvement with medical staffs who, at the time, were independent practitioners and beyond the hospital’s direct control. Therefore, the job of payers-governments and private insurers- was to “reimburse” hospitals for their expenses (that is, so long as the costs were “allowable”). The subtext of using the term “reimbursement” was : “We already spent the money and you owe us!” In 2026, this mindset miraculously persists. This is despite the fact that Medicare, the largest and most influential payor for hospital services, has not reimbursed hospitals for the cost of inpatient care for more than forty years and for outpatient services in more than twenty! And the rest of the payment system is rebelling against the role as the resid...