What is the practice of cost shifting primarily intended to address?

The practice of cost shifting is primarily intended to balance costs across various patient groups. In healthcare, cost shifting occurs when providers adjust their pricing strategies for different groups of patients based on the reimbursement rates they receive from insurers. For example, if a provider is receiving lower payments from one group of patients, they may increase prices for another group in order to cover the overall costs of providing care. This approach aims to ensure that all patient groups contribute fairly to the expenses incurred by the healthcare provider, thereby maintaining financial stability and allowing the provider to continue offering services.

Balancing costs is crucial in an environment where reimbursement rates can vary significantly based on factors such as insurance providers, governmental programs, and patient demographics. By managing these costs effectively, healthcare organizations can work towards sustainability while ensuring that necessary services remain available to all patients.