Healthcare News & Insights

More insured patients = Higher pay for safety-net hospitals

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Safety-net hospitals that are located in states that expanded Medicaid coverage under Obamacare are seeing some huge benefits — fewer uninsured patients and increased revenue. 

In fact, these hospitals — which treated a disproportionate share of poor and uninsured people and faced billions of dollars in unpaid bills before the health law’s expansion — are now reaping the benefits. While they expected to see the amount of uninsured patients they treat go down, they didn’t expect the results they are seeing now.

Obama care has expanded healthcare coverage to more than 13 million people this year alone, allowing them to seek treatment through the proper channels instead of going straight to the emergency room where they can’t be turned away.

Positive reports

In a recent story by Kaiser Health News, Harborview Medical Center, Seattle’s largest safety-net hospital, reported that its proportion of uninsured patients fell from 12% last year to 2% this spring — a number previously unheard of. And thanks to the drop, the Center expects its revenue to increase by $20 million in 2014.

Denver Health in Colorado and the University of Arkansas for Medical Sciences Hospital (UAMS) in Little Rock, AK, two other big safety-net hospitals, also have had positive experiences. Both facilities reported that their number of uninsured patients was cut by about half. “This is really phenomenal,” said Ellen Kugler, executive director of the National Association of Urban Hospitals, based in Sterling, VA, which represents inner-city safety-net institutions. “It shows the Affordable Care Act (ACA) is clearly working in these locations.”

Financial struggles

A recent study estimated the costs of uncompensated care to hospitals to be as high as $45 billion in 2013. While government programs did help defray 65% of those costs, providers were still left with billions of dollars in unpaid bills.

That’s why the hospital industry was one of the first groups to support the ACA. To many hospitals, it was worth it to agree to the Medicare and Medicaid funding cuts — $150 billion over 10 years — in order to get more paying customers. However, those safety-net hospitals unfortunate enough to be in states that didn’t take the Medicaid expansion, will experience funding cuts without any reduction in uninsured patients.

Patients reap benefits too

While hospitals are benefiting from all of this, so are patients. Now, instead of having to rely on emergency rooms to get the care they need, they’re able to go through the proper channels to receive quality care. They can see primary care physicians, who can then send them for other tests and services they require — a more cost-effective way of providing care.

UAMS also reported that it’s seen a drop in the number of ER visits by uninsured patients. It went from 6,000 visits in the first three months of 2013 to 4,000 visits in the first three months of 2014. Denver Health also reported seeing a boost in the number of people — mostly Medicaid patients — going to its primary care clinic instead of its ER. In fact, its primary-care office visits are up 14% this year, while ER visits are down 2%. In addition, patient visits for mental health and substance abuse services are up by nearly 50%.

They’re not alone

Safety-net hospitals, however, aren’t the only ones experiencing benefits from the expansion of coverage. Community Health system, which owns four hospitals in Eastern Washington, Hospital Corp. of America (HCA) and Tenet Healthcare also reported that their hospitals in Medicaid-expansion states have seen uninsured patient rates drop by a third in the first quarter of 2014.

The facilities located in states that didn’t participate in the Medicaid expansion saw a 6% rise in their uninsured patient rates. If these investor-owned hospital companies have a number of facilities in states that didn’t participate in the Medicaid expansion, they could be in for an unsteady future. But for those facilities lucky enough to be in states that did participate, the early decline in their uninsured patient rates is a welcome surprise.

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