Healthcare News & Insights

Healthcare reform: Current impact on hospitals

Most hospitals know healthcare reform has been a mixed bag. While it’s helped facilities in many ways, it’s also placed unprecedented scrutiny on how they deliver care. Now there’s news confirming these mixed results will continue, at least for the immediate future. 

Affordable Care Act

And they’ll likely have a significant impact on your hospital’s bottom line.

Revenue changes

Healthcare reform has led to an uptick in newly insured patients seeking care, and this has brought facilities new revenue.

A recent article in Forbes discussed this trend. Because more states have expanded their exchanges to offer patients affordable insurance (currently 30 states plus Washington DC), hospitals experienced profit growth in the first half of the year, according to a report from Fitch Ratings.

Hospitals should be able to maintain their profits as the year ends, but revenue growth will likely stagnate, the report said.

None of the states that refused to expand Medicaid coverage are close to reversing that decision. And since an election year is on the horizon, lawmakers aren’t likely to budge based on political affiliations alone.

With time this situation may change – especially once the 2016 election is over. After the dust settles, the feds may be more willing to provide reluctant states with financial incentives for expanding healthcare coverage. But for now, expansion is likely to remain stagnant.

The Forbes article also discussed an even tougher situation for hospitals: As value-based purchasing and other Obamacare initiatives are trying to cut back on lengthy hospital stays, the focus of care will shift more toward the outpatient setting. This typically generates less revenue because the services are generally cheaper and there’s increased competition from other providers.

It’ll be even more crucial for facilities to stand out from their competitors. One way to do so: Make sure there’s accurate, positive information on any review sites and social media pages.

Readmissions & sick patients

A big provision of healthcare reform that’s improving care, but causing hospitals trouble: penalties for readmissions under the federal Hospital Readmissions Reduction Program.

Ever since the Centers for Medicare & Medicaid Services (CMS) began its focus on decreasing 30-day readmission rates for conditions like heart disease, hospitals have been pressured to boost their quality of care or face steep reimbursement penalties.

New research shows safety-net facilities that already treat the sickest, most disadvantaged patients are bearing the brunt of these penalties.

According to an article in the Washington Post, researchers from Harvard Medical School looked at some of CMS’ worst-performing hospitals. They discovered various issues outside of these facilities’ control affected readmission rates.

In fact, according to their report, which was published in the Journal of the American Medical Association (JAMA) Internal Medicine, the researchers discovered that close to 24 variables that weren’t related to the care these hospitals provided explained much of the difference between top-performing hospitals and those that missed the mark. These factors included:

  • patients’ level of education
  • their household income, and
  • the ability to perform “basic” functions such as bathing and feeding themselves.

Generally, researchers said, hospitals with the worst readmission rates had patients who not only had significant difficulties with basic daily functions, they also had more chronic conditions and less education.

Combined, all these issues made it tough for patients to manage their own health, causing worse care outcomes.

CMS only adjusts its readmission penalties using factors such as gender, age and severity of illness. It doesn’t account for patients’ income, or if they’re battling multiple chronic illnesses. Since these factors are often present in people who seek care at safety-net facilities, judging them without including these factors isn’t painting a complete picture.

Ultimately, CMS is punishing these hospitals by withholding payment. This means facilities treating the most vulnerable patients are losing out on funding that could’ve helped them, and their bottom lines are suffering.

With research showing health is dependent on areas such as socioeconomic status and level of health literacy, CMS may give its readmissions formula a second look. But for now, hospitals will have to adjust as best they can.

As we face an election year, the face of Obamacare may change even more drastically down the line. We’ll keep you posted on any developments.

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