ACA and Hospitals

VII. Key Issues: Regulation & Reform >> C. Health Reform >> Affordable Care Act (ACA) >> ACA and the Health Sector >> ACA and Hospitals  (last updated 2.24.19)

Overview

  • How Will Hospitals be Affected by Health Care Reform? “According to Urban Institute authors Robert Berenson and Stephen Zuckerman, hospitals will likely be able to improve the quality of their care without seeing much difference in their revenues and expenditures. For the most part, the payment changes that affect hospitals are related to somewhat reduced payment updates based on current payment methods and the introduction of new, marginal incentives performance—a modest move in the direction of paying for value rather than volume.” (Urban Institute, July, 2010)
  • Ryan AM, Mushlin AI. The Affordable Care Act’s Payment Reforms and the Future of Hospitals. Ann Intern Med. 2014;160:729-730. doi:10.7326/M13-2033. “Hospitals have remained consistent in their share of health care expenditures despite dramatic changes in the payment and financing of care, including the passage of the Patient Protection and Affordable Care Act. This commentary discusses how they have done this and what it portends for health care reform.”

Massachusetts Health Reform as a Model for the ACA

  • Use of Intensive Care Services and Associated Hospital Mortality After Massachusetts Healthcare Reform. “Despite the reduction in uninsured patients, we found no increase in ICU utilization as measured by ICU admissions per capita or ICU admissions per hospitalization and no changes in mortality or use of postacute care facilities among patients admitted to the ICU. In a sensitivity analysis excluding a comparison state because it had undergone Medicaid expansion prior to the study period, Massachusetts had increased in-hospital mortality among ICU patients following insurance reform accounting for changes in the control group in a difference-in-differences analysis… Our findings have important implications for anticipating the effects of the ACA.” (Critical Care Medicine, April, 2014)
  • Survival Rates in Trauma Patients Following Health Care Reform in Massachusetts. “Two other groups have recently reported worse outcomes in Massachusetts following HCR. Albert et al. studied patients who underwent invasive cardiovascular procedures before and after Massachusetts HCR and found an increase in hospital-adjusted odds of death following HCR among less-educated patients. Lasser et al. found that hospital readmission rates increased in Massachusetts compared with New Jersey and New York following HCR…Because traumatic injury is a common acute condition with important health, disability, and economic consequences, examination of the effect of HCR on patients hospitalized following injury may help inform the national HCR debate… The risk-adjusted difference-in-difference assessment revealed a transient increase of 604 excess deaths (95% CI, 419-790) in Massachusetts in the 3 years following implementation of HCR. Health care reform did not affect health insurance coverage for patients hospitalized following injury but was associated with a transient increase in adjusted mortality rates. Reducing mortality rates for acutely injured patients may require more comprehensive interventions than simply promoting health insurance coverage through legislation.” (JAMA Surgery, 7.1.15)
  • Decline in Consultant Availability in Massachusetts Emergency Departments: 2005 to 2014. “We surveyed Massachusetts ED directors in 3 waves between 2006 and 2015 to determine trends in specialist consultant availability. During this period, the burden of increasing patient volume was clear: there was growth in the median number of patients treated in EDs, patients being primarily cared for in hallways, and full-time physician and nurse staff, despite a similar rate of admissions and critical care transfers. (The decline in the rate of uninsured patients likely reflects Massachusetts’ passage of universal health care during this period.) These patterns indirectly suggest greater need for consultants in number and availability. Nonetheless, in general, consultant availability declined, although trends varied by specialty. A sensitivity analysis confirmed these trends. These trends, which highlight an increasingly taxed health care professional system, were present for general surgery, neurology, obstetrics/gynecology, orthopedic surgery, pediatrics, and plastic surgery, and most striking for psychiatry. To our knowledge, this is the first report to describe such trends in consultant availability to the ED.” Annals of Emergency Medicine, 8.25.16)

Tax-Exempt Hospitals

  • Additional Requirements for Tax-Exempt Hospitals. The Affordable Care Act adds requirements in the Internal Revenue Code that tax-exempt hospitals must meet to maintain their tax-exempt status. More information can be found in Notice 2010-39, which solicited written comments on the application of the new requirements. Comments must have been submitted by July 22, 2010.
  • Obamacare Installs New Scrutiny, Fines for Charitable Hospitals that Treat Uninsured People. “A new provision in Section 501 of the Internal Revenue Code, which takes effect under Obamacare, sets new standards of review and installs new financial penalties for tax-exempt charitable hospitals, which devote a minimum amount of their expenses to treat uninsured poor people. Approximately 60 percent of American hospitals are currently nonprofit. Charity for the uninsured is one of the factors that could discourage enrollment in Obamacare…‘Failure to comply, or to prove this continuing need, could result in the loss of the hospital’s tax-exempt status.’” (Daily Caller, 8.8.13)
  • Hospital Charity Care — Effects Of New Community-Benefit Requirements.  “The Internal Revenue Service (IRS) recently finalized new requirements for nonprofit hospitals to maintain their tax-exempt status under the Affordable Care Act (ACA). Section 501(r) of the Internal Revenue Code now requires each hospital to establish a written financial-assistance policy that applies to all ’emergency and medically necessary care.’… Although the new requirements may do little to increase the scope of existing charity care policies, they could increase the proportion of people eligible for charity care who do receive it. As these requirements are fully enforced by the IRS in 2016, nonprofit hospitals will have to ensure that patients eligible for partial or full charity care receive it.” (New England Journal of Medicine, 10.29.15)
  • The Five Things Hospitals Don’t Want You to Know About Obamacare. “What he sees today are Oregon’s hospitals banking windfall profits—even though they are nonprofits—and providing dramatically less charity care to the poor. ‘When I look at hospital reports,”’ Greenlick says, ‘charity care is essentially gone.’ That’s significant, Greenlick and others say, because hospitals’ provision of charity care was the reason nearly every Oregon hospital was exempted from paying property and income taxes… Here’s what changed.
    • More people have insurance.
    • More insured Oregonians means less charity care.
    • Oregon hospitals are making a lot of money.
    • Hospitals are enjoying their cash windfalls—and investing aggressively.
    • Critics are asking if it’s time to end tax exemptions for hospitals.” (Willamette Week, 4.12.17)
  • IRS Revokes Hospital’s Tax-exempt Status for Failure to Comply with ACA Rule. “The Internal Revenue Service has revoked the tax-exempt status of an unnamed nonprofit hospital for failure conduct a community health needs assessment, adopt an implementation strategy and make it widely available to the public. In a letter dated Feb. 14, 2017, and released earlier this month, the IRS said it revoked the hospital’s tax-exempt status for failure to comply with section 501(r) of the Internal Revenue Code. The ACA added new requirements that hospitals must meet to qualify as a tax-exempt facility under section 501(c)(3) of the Internal Revenue Code. Specifically, the ACA added section 501(r), which imposes four new requirements, one of which requires hospitals to conduct a community health needs assessment at least once every three years and adopt an implementation strategy to address community health needs identified in the assessment… The IRS noted a revenue agent met with the hospital’s CEO, CFO and COO during the audit, and the administrators made it clear the organization ‘had neither the will, the financial resources, nor the staff to follow through with the CHNA process.’” (Becker’s Hospital Review, 8.17.17)

Bundled Payment Demonstrations

Hospitals and Pay for Performance

  • Health Insurers Are Trying New Payment Models, Study Shows. “Health insurers are experimenting with new formulas for reimbursing doctors and hospitals, slowly moving away from the traditional approach of basing payments on the numbers of tests and procedures performed, according to a survey of Blue Cross insurers, among the most dominant plans in the country. The survey, released on Wednesday by the plans’ trade association, estimates that $1 out of every $5 in reimbursements is being paid under an arrangement in which providers are rewarded for improving care and lowering costs… Some policy specialists say these experiments are not enough because they do not fundamentally change the way hospitals and doctors make money. Many of the programs, for example, do not put the health system at risk if it mismanages patients by giving poor or costly care… Mr. Wilson, the Blue Cross of North Carolina executive, acknowledged that his company must expand its programs and move toward a payment model where health systems are at more financial risk in caring for patients.” (New York Times, 7.10.14)
  • Doctors Drowning in Flood of Obamacare Regulations: Cleveland Clinic CEO. “In the seven years since the introduction of Obamacare, health-care industry regulation has soared to all-time highs, Cleveland Clinic CEO Dr. Toby Cosgrove told CNBC on Friday. ’The number of quality metrics that we have to report to the government every year is just going up like crazy. We’re now reporting well over 100 quality metrics on a regular basis,’ Cosgrove said on Squawk Box. The regulation paperwork comes in the form of a 7-foot-tall stack of 16,000 pages, Cosgrove said… As regulation and industry knowledge expand, the health landscape is becoming increasingly unstable, so much so that smaller practices have no choice but to consolidate with larger systems, he said… Data centers, human resources, supply centers, purchasing and billing will all still require attention, and that will prove difficult if health-care businesses continue to drown in seas of paperwork, he said.” (CNBC, 9.30.16)
  • See Pay for Performance for greater detail on the strategy.

Hospital Readmissions Reduction Program (HRRP)

Projected Impact

CBO projected (12.08) that reducing Medicare payments to hospitals with high readmission rates would save $9.7 billion over 10 years if hospitals with readmission rates above the 50th percentile were targeted, or $8.8 billion if the threshold were set at the 75th percentile. The analysis provides the pros and cons of this approach (Option 31).

Actual Impact

Patient Satisfaction

The Hospital-Acquired Condition (HAC) Reduction Program

Hospital Value-based Purchasing Program (HVBP)

Hospital Monitoring of High-Risk Behavior

  • Hospitals Soon See Donuts-to-Cigarette Charges for Health. “Some hospitals are starting to use detailed consumer data to create profiles on current and potential patients to identify those most likely to get sick, so the hospitals can intervene before they do… Information compiled by data brokers from public records and credit card transactions can reveal where a person shops, the food they buy, and whether they smoke. The largest hospital chain in the Carolinas is plugging data for 2 million people into algorithms designed to identify high-risk patients, while Pennsylvania’s biggest system uses household and demographic data.” (Bloomberg Business, 6.26.14)
  • Hospitals to Begin Monitoring Your Credit Card Purchases to Flag ‘Unhealthy’ Habits. “What you buy at the grocery store, where you live, and even your membership status at the local gym are all subject to a new data collection scheme by the American medical system. Reports indicate that hospitals and doctors’ offices all across the country are now collecting this and other personal information in order to target individuals deemed to have ‘unhealthy’ lifestyle habits that put them at high risk of disease.” (Caldwell, Leonard, 8.11.14)

Impact on Hospital Financial Performance

Impact on Hospital Uncompensated Care

  • ASPE (September 2014). Impact of Insurance Expansion on Hospital Uncompensated Care Costs in 2014 (9.1.14). “United States hospitals provide roughly $50 billion in uncompensated care to uninsured and underinsured patients annually. Under the Affordable Care Act, a major insurance coverage expansion is taking place; this expansion is anticipated to reduce uncompensated care as more and more Americans gain insurance coverage. First, this brief examines earnings reports from major for-profit U.S. hospital chains and finds that volumes of uninsured admissions have fallen by 50-70% in states that have expanded Medicaid, and by 2-14% in states that have not expanded Medicaid. Next, the brief uses cost report data to estimate the change in hospital uncompensated care costs as a result of insurance expansion, and finds that U.S. hospitals are projected to save $5.7 billion in uncompensated care costs in 2014. About three-quarters of these savings ($4.2 billion) will accrue to states that have elected to expand Medicaid, and about a quarter ($1.5 billion) to states that have chosen not to expand Medicaid.”
  • ObamaCare Is Growing The Number Of Unpaid Medical Bills. “A big hospital chain’s surprise decision to write off a slug of bad debt may be a signal of much deeper consumer healthcare strains being caused by ObamaCare. Community Health Systems surprised analysts this week, announcing that among other things, the company would take a $169 million provision for bad debt. The write off was a big part of Community’s dismal fourth quarter earnings report, leading to a 22% drop in the company’s stock on Tuesday… The rising amount of uncollected co-pays and deductibles may be an early sign of consumer stress as the economy weakens. But more likely, it also reflects changes in the healthcare market that are saddling consumers with a much bigger share of their medical costs. For this, ObamaCare is playing a big role.” Gottlieb, Scott. (Forbes, 2.19.16)
  • Bad Debt Is the Pain Hospitals Can’t Heal as Patients Don’t Pay. “[S]ince Obamacare became law in 2010, there’s also been an increase in insurance that comes with high deductibles and cost-sharing. Under those plans, the first few thousand dollars of annual medical expenses come out of patients’ wallets. That’s money that hospitals like Childress Regional Medical Center in the Texas Panhandle region are unlikely to collect.
    • Community Health Systems Inc… revised its fourth-quarter 2015 provision for bad debt up by $169 million — and said that 40 percent, or about $68 million of that amount, was from patients being unable to pay deductibles and co-payments. Patient bankruptcies also contributed, the company sai
    • HCA Holdings Inc., the biggest U.S. hospital company, also reported increasing rates of bad debt in the second and third quarters of 2015.
    • Patients are unlikely to pay medical bills that are greater than 5 percent of household income, according to the Advisory Board, a consulting firm to hospitals. Median household income in the U.S. is at about $53,000, suggesting that when out-of-pocket charges exceed $2,600 hospitals can forget about collecting.
    • Last year, bad debt rose by 20 percent to $425 million at the (Minnesota Hospital) Association’s 140 member hospitals. ‘We have 39 hospitals that have negative margins and the majority of them are rural,’ he said in a telephone interview. ‘They have less of a financial cushion to absorb the losses of bad debt.’” (Bloomberg Business, 2.23.16) 
  • Mayo to Give Preference to Privately Insured Patients over Medicaid Patients. “Mayo is hardly alone in trying to build its privately insured clientele. Hennepin County Medical Center, for example, is building a new ambulatory center and North Loop clinic in part to attract privately insured patients… Overall hospital revenue in Minnesota rose between 2013 and 2015 because Medicaid started paying for patients who previously were uninsured, according to the Minnesota Hospital Association. But the hospitals also estimated an increase from $713 million to $897 million in unreimbursed costs because of Medicaid’s low payment rates.” (Star Tribune, 3.15.17)
  • The Health Care Industry is Bound to Collapse Soon, Experts Say. “The US health care sector may be incubating the next big Lehman-style disaster that could tip the economy into a full-blown recession, according to industry analysts. Forget about the subprime mortgage collapse. The health care sector is nursing its own toxic mess, with soaring debt, the analysts say. ‘As a nation, we have to step up our game and get on top of it; this is a huge issue,’ said Chris Oretis, a former Washington lobbyist who now works as executive vice president in the life insurance secondary markets at GWG Holdings… ‘There’s no question that rising health care costs are hurting our overall economy,’ said New York-based financial adviser Michael Mondiello. ‘With consumer spending accounting for some 70 percent of economic activity, the more we spend on health care, the less we have to purchase other things like a vacation or to save for retirement.’ The feeble economic growth elsewhere has failed to keep up with a gargantuan health care debt binge among both individuals and governments, critics said. Then there’s the boom in mergers, in facility building and in manpower hiring that analysts say could be signs of a speculative bubble that could eventually burst… The report shows industry growth has surpassed what is sustainable:
    • Health care company debt is up 308 percent since 2009.
    • The number of hospitals in health systems has expanded by 26 percent since 1999.
    • The yearly medical costs for a family of four have jumped 189 percent since 2002, from $9,000 to $26,000.

‘It could be like a Lehman Brothers scenario, where a couple of big health care companies take the economy down,’ Burns told The Post.” (New York Post, 4.30.17)

Other Impacts Affecting Hospital Finances

  • Cleveland Clinic CEO: Affordable Care Act is Having a “Major Effect” on Health Care Providers. “‘We know for example that we’re going to get paid less for what we do,’ Cosgrove stated. ‘Hospitals are going to be paid less for what they do. We also know that insurers are paying less for what we do.’ Cosgrove said providers need to ‘become more efficient’ in how they deliver health care.” (Cleveland CBS, 3.31.14)
  • An Obamacare Winner: The Safety-Net Hospital. “At Seattle’s largest safety-net hospital, the proportion of uninsured patients fell from 12% last year to an unprecedented low of 2% this spring — a drop expected to boost Harborview Medical Center’s revenue by $20 million this year…Converting patients from no cash to some cash ‘is a good thing,’ said Sheryl Skolnick, a hospital analyst with CRT Capital Group in Stamford, Conn. Skolnick said not every hospital will make up their Medicare and Medicaid funding cuts by seeing more insured patients, particularly in states that did not expand Medicaid. For HCA and Tenet — both of which own hospitals in Florida, Texas and other states that did not expand Medicaid — that could mean trouble. But for those experiencing it, the strong early drop in uninsured patients is a welcome development.” (USA Today, 5.24.14)
  • Hospitals Cash In on the Newly Insured: More Surgery, Maternity Care, ER Visits Boost Admissions—to Insurance Firms’ Chagrin. “A rush of newly insured patients using health services has boosted hospital operators’ fortunes but has racked up costs that insurers didn’t anticipate, corporate filings and interviews with executives show. People are getting more back surgeries, seeking maternity care and showing up at emergency rooms more frequently, executives say, boosting income for hospital operators. Despite efforts to steer some new enrollees to less expensive places for care—for instance, urgent-care centers or community doctors’ offices—emergency room use grew, too. ER visits increased 8% at Tenet and 5.7% at HCA for the quarter. Large nonprofit hospital systems also reported rising rates of hospital admissions and other services, bond filings show… Not all hospitals enjoyed the same influx of newly paying customers. Moody’s  Investors Service has downgraded 34 hospitals so far this year and upgraded only 12, said Jennifer Ewing, an analyst for the credit rater.” (Wall Street Journal, 8.4.14)
  • Hospitals Reassess Charity Given Obamacare Options. “As more Americans gain insurance under the federal health law, hospitals are rethinking their charity programs, with some scaling back help for those who could have signed up for coverage but didn’t. The move is prompted by concerns that offering free or discounted care to low-income, uninsured patients might dissuade them from getting government-subsidized coverage. It also reflects hospitals’ strong financial interest in having more patients covered by insurance as the federal government makes big cuts in funding for uncompensated care.” (Kaiser Health News, 8.16.14)
  • Tenet, CHS Seem Unworried by Threats to Obamacare. “With an influx of newly insured patients under health reform and the prospect of more growth, executives with Tenet Healthcare Corp. and Community Health Systems downplayed legal and political threats to the law and outlined strategies to more aggressively enroll more uninsured in health plans. Dallas-based Tenet and Franklin, Tenn.-based Community Health Systems reported Monday that their third-quarter performance benefited from the Patient Protection and Affordable Care Act as fewer uninsured patients visited hospitals and clinics where states expanded Medicaid eligibility under the law. The hospital chains also reported growing numbers of patients with commercial insurance sold through state exchanges, where low- to mid-income households can get subsidized health plans.” (Modern Healthcare, 11.4.14)
  • Ratings Agencies Forecast Trouble for Hospitals. “Credit ratings agencies are forecasting trouble for the U.S. hospital sector in 2015 as federal reimbursements decrease and Republicans float a variety of changes to ObamaCare. Standard & Poor’s Ratings, Moody’s Investors Services and Fitch Ratings all predicted that the healthcare world will face challenges in the form of rising costs and uncertainty surrounding the healthcare law.” (The Hill, 12.17.14)
  • U.S. Hospitals Optimistic They’ll Dodge Bullet with Ruling in King v. Burwell. “U.S. hospital executives said on Wednesday they were optimistic they will avoid the toughest consequences of a Supreme Court decision on whether millions of Americans can continue to purchase subsidized health benefits under Obamacare… Universal Health shares rose 2.7 percent and LifePoint rose 3.6 percent on Wednesday. Community Health Systems, HCA Holdings and Tenet Healthcare all jumped more than 5 percent.” (Reuters, 3.4.15)
  • HCA Leads Hospital Stocks Lower on More Uninsured Patients. “HCA Holdings Inc. shares dropped in late trading after the biggest U.S. hospital chain reported preliminary third-quarter earnings that missed analysts’ estimates, raising concerns across the industry of an increase in uninsured patients who can’t pay their bills… Patients without insurance rose to 8 percent of total visits, from 7.3 percent a year earlier, HCA said. Since HCA’s size makes it a bellwether for the industry, the results suggest an increase in unpaid bills for hospitals across the country, said Ana Gupte, an analyst with Leerink Partners in Boston. Meanwhile, the growth of patient volumes from the expansion of coverage under the Patient Protection and Affordable Care Act appears to be slowing, Gupte said.” (Bloomberg Business, 10.14.15)

  • Health System Operating Margins Dropped 39% Post-ACA Coverage Expansion. “A new analysis of 104 health systems comprising 47% of U.S. hospitals finds broad-based deterioration of operating margins following the Affordable Care Act (ACA) insurance coverage expansion. According to the Navigant study of for- and not-for-profit health system financial disclosures (click here to access), from 2015 to 2017:

    • The average operating margin decline for analyzed systems was 38.7%. Not-for-profit system margins fell 34%, while for-profit margins fell 39%. 
    • 65% of systems experienced operating income declines totaling $6.8 billion, with the most significant reductions occurring in the U.S.’s fastest-growing regions: West/Southwest and South Central.

    At the root of these declines were multiyear reductions in the rate of topline operating revenue growth, which fell from 7% (2015 to 2016) to only 5.5% (2016 to 2017), and a failure to contain expenses in line with revenue deterioration. The main drivers of topline weakness appear to be:

    • Weakening demand for such core hospital services as surgery and inpatient admissions, due in part to rising patient cost exposure from high-deductible health plans; 
    • Deteriorating collection rates for private accounts in non-ACA expansion states; 
    • Steady erosion in Medicare payment rates due to the ACA and the 2012 federal budget sequester; and 
    • Failure of health system value-based insurance contracts to deliver sufficient patient volume to offset steep upfront payer discounts and significant hospital population health investments.”

    (Navigant, 9.12.18)

Staffing Reductions

  • Cleveland Clinic Reducing its 2014 Budget by $330 Million. “‘The cuts for 2014, about half of those are related to the Affordable Care Act… We anticipate a reduction in workforce,’ Cleveland Clinic executive director of communications Eileen Sheil said in an interview with TheDC… ‘We offered early retirement to 3,000 employees,’ Sheil said, but noted that the early retirement option recently offered to staff was ‘voluntary’ for eligible employees. ‘The $330 million cut is not all layoffs,’ Sheil said… ‘We’re taking money out of vendors, renegotiating contracts, looking at where we can reduce duplications, improve supply chain efficiencies… how we can scale back and use less. How we can take costs out of our operating rooms,’ Sheil said.” (Daily Caller, 11.25.13)
  • In High-Profile Kentucky, Hospitals Say Obamacare Has Hurt Them. “The Medicaid expansion has given many residents health coverage that has brought new money into hospitals, but ‘the rest of the story is the cuts.’ Hospitals are suffering a net loss, officials said, partly because about three-quarters of newly-insured Kentuckians signed up for Medicaid, which reimburses hospitals less than it costs to treat patients… About one in five hospital patients who recently signed up for Medicaid previously had private health insurance, which reimbursed at higher rates, officials said. Meanwhile, many patients with job-based private insurance, and plans purchased on the state exchange, face high deductibles and co-pays… More than 65% of 109 hospitals responding to a September KHA survey reported they reduced staff, cutting more than 7,700 positions through layoffs, attrition and abolished positions.” (USA Today, 5.8.15)
  • Baystate Medical Center Cutting Jobs, Hours. “The parent company of Springfield’s Baystate Medical Center is laying off of 24 employees, decreasing hours for 17, and leaving 45 positions unfilled to help close a $22 million budget shortfall…Baystate officials say the shortfall is the result of the government not paying enough to cover health care costs of the poor. Baystate Medical provided more than $112 million in unreimbursed care in 2014.” (Associated Press, 6.5.15)
  • Brigham and Women’s Offers Buyouts to 1,600 Workers. “Brigham and Women’s Hospital, one of Boston’s largest employers, said Thursday that it is offering voluntary buyouts to 1,600 workers to rein in costs, a sign of financial stress in one of the region’s bedrock business sectors… Hospitals, long a source of good jobs for workers up and down the income ladder, are under increasing pressure from private and government insurers to control expenses while doing more to keep patients healthy… Other hospitals will likely follow Brigham in trimming or restructuring their payrolls, said Nancy Kane, a professor at the Harvard T.H. Chan School of Public Health… Meanwhile, more people in Massachusetts have been joining the state Medicaid program, called MassHealth, while the share of residents paying premiums for commercial health insurance is falling.” (Boston Globe, 4.27.17)
  • “‘Health care companies borrowed too much money, and have grown their debt faster than their revenue, so you have to have a pullback.’ Earlier this year, for example, MD Anderson Cancer, Houston’s second-biggest employer, said it was slashing 1,000 jobs amid losses that surpassed $100 million in one quarter alone. Job growth overall in the health care sector is slowing.” (New York Post, 4.30.17)

Hospital Closures

  • Rural Hospitals, Beset by Financial Problems, Struggle to Survive. “The Kansas-based National Rural Health Association, which represents about 2,000 small hospitals across the country and other rural care providers, says that 48 rural hospitals have closed since 2010, the majority in Southern states, and 283 others are in trouble. In Texas alone, 10 have closed…Experts and practitioners cite declining federal reimbursements for hospitals under the Affordable Care Act as the principal reasons for the recent closures. Besides cutting back on Medicare, the law reduced payments to hospitals for the uninsured, a decision based on the assumption that states would expand their Medicaid programs…Another issue is the deductibles charged by some of the new insurance plans created under the health law. In many cases, they ‘are running between $2,500 and $5,000,’ and people can’t pay them, said Maggie Elehwany, chief lobbyist for the Rural Health Association.” (Washington Post, 3.15.15)
  • Rural Hospitals Struggle to Stay Open, Adapt to Changes. “A total of 50 hospitals in the rural U.S. have closed since 2010, and the pace has been accelerating, with more closures in the past two years than in the previous 10 years combined, according to the National Rural Health Association. That could be just the beginning of what some health care analysts fear will be a crisis. An additional 283 rural hospitals in 39 states are vulnerable to shutting down, and 35 percent of rural hospitals are operating at a loss, according to iVantage Health Analytics, a firm based in Portland, Maine, that works with hospitals…Big city hospitals have been closing at about the same rate as rural ones during the past five years, but an abundance of alternatives in most major metropolitan areas typically reduces the effect on patients. ” (Associated Press, 5.1.15)
  • Q&A: Why Have Rural Hospitals Been Closing? “There are more than 4,700 hospitals in the U.S, spread about evenly between urban and rural areas. But that number has been dwindling. More than 100 hospitals have closed since 2010, and the pace has quickened in the past couple of years. Hospitals are closing at about the same rate in urban and rural areas, but health care analysts say the effect often is more pronounced in small towns, where residents typically must travel farther to get to the next nearest hospital.” (Associated Press, 5.1.15)
  • Taking Stock of North Carolina’s Rural Hospitals. “Losing the only hospital in a county leads to a decrease of about $1,300 in per capita income and increases the unemployment rate by 1.6 percent…Nationally, 50 rural hospitals have closed since 2011, two of those in North Carolina…But there’s a whole economic aspect as well. We found in research we conducted about a decade ago that when a hospital closes it has a long-term per capita income effect. It’s not just, ‘Well, some people are losing their jobs but we can recover.’ It’s a permanent shock to the community.” (North Carolina Health News, 5.11.15)

Hospitals and Accountable Care Organizations

See Accountable Care Organizations for a general discussion of ACOs and their impact. This section is devoted to a discussion of ACOs as they affect hospitals.

  • ACOs Expected to Play Major Role Across the Country. “The Obama team aims to use ACOs more widely, well beyond Medicare. ‘Health care policymakers inside the White House and Centers for Medicare and Medicaid Services (CMS) may also be crafting new rules that would provide ACOs favorable treatment in the health insurance exchanges,’ Gottlieb writes. ‘These efforts are premised on the belief that ACOs could eventually function in place of traditional for-profit health plans in the new exchanges.’ This is where hospitals come into play. ObamaCare planners envision the ACOs will be built onto the nation’s existing hospital architecture. As former Obama administration official Nancy DeParle put it in a recent article, ‘the economic forces put in motion by [the Obama health care plan] are likely to lead to vertical organization of providers and accelerate physician employment by hospitals and aggregation into larger physician groups.'” Schulz, Nick. (American Enterprise Institute, 3.1.11)
  • Why Are Hospitals Buying Physician Practices and Forming Insurance Companies? “One might ask how an ACO is supposed to reduce patients’ utilization of health care… [I]f an ACO controls a large percentage of the available providers, it gets a lot easier to reduce patient utilization. If an ACO wants to, say, try to limit patients to 12 specialty visits a year, it’s much easier if they ‘own’ most of the specialists in the area. If an ACO includes many of the major hospitals, and a significant number of physicians in every major practice area – including, say, imaging facilities and labs (possibly a hospital outpatient lab), then it becomes a lot easier to guide patients to the level and type of utilization desired – which is, for purposes of the Medicare Shared Savings Program, always less utilization. And of course, it is much easier to enforce referral and utilization policies on physicians who are employees of a group running the ACO, rather than simply independent businesses who happen to join an ACO at a given moment in time.” (American Action Forum, 2.16.16)

Hospital Acquisitions of Physician Practices

Overview

    • Pressures to Consolidate Created by ACA.  “For a variety of reasons –most of which have little to do with providing you with better care– the hospital world has grown more centralized. It’s done so to reduce competition and get better rates from insurance companies. It’s done so to create larger risk pools of patients under the ‘rate reform’ that incorporates more bundled and capitated payments. It’s done so to keep you as a captive customer for your health care needs. It’s been aided and abetted by electronic health record companies that find a mutual advantage with their hospital colleagues in minimizing the ability of your EHR to be easily transferable to other health systems.” (Not Running a Hospital, 11.5.15).
  • Getting to the Root of the Merger and Acquisition Frenzy. “In any given area, there are two or three dominant hospitals, and everyone is locked into their networks. Providers are in a symbiotic relationship with the payers. Although the market need for physicians is high right now, the medical school system can’t seem to mint new doctors fast enough. So the merger activity on the extended provider side takes the form of insurance carriers and/or providers acquiring secondary medical service practices, such as physical therapy groups, long-term care providers, nurse delivery services, dental clinics, pharmaceutical services, etc. Many practice mergers have occurred already, and it seems that this phase of the merger-and-acquisition scuffle is over now. Gone is the day of the solo physician’s office.” (Insurance News Net, 12.4.15)

Impact on Costs

    • Idaho Hospital Battle A Microcosm Of Debate Over Industry Consolidation. “When Idaho’s largest hospital system bought the state’s largest doctor practice in 2012, the groups expressed hope that the deal would spark a revolution in delivering better-quality care… But the Federal Trade Commission filed suit, arguing that St. Luke’s purchase of the 43-physician Saltzer Medical Group in Nampa was anticompetitive and would lead to higher prices for Idaho patients. A federal judge agreed in January, and his order to dissolve the merger has put this picturesque Boise suburb at the center of a national debate over the consolidation of American medicine. The decision pushed back against the merger mania gripping the health care industry, raising questions about whether larger health systems really do rein in spending and improve care, or whether they fuel higher prices in the long run… ‘The Affordable Care Act is pushing consolidation and working together, but the Federal Trade Commission and the Justice Department seem to be saying, ‘Wait a second, there are antitrust laws here,”’ said Robert Field, a law and health policy professor at Drexel University in Philadelphia. ‘The federal government has a schizophrenic attitude toward provider consolidation.’” (Kaiser Health News, 4.22.14)
    • Hospitals’ Purchase Of Doctors Leads To Higher Prices, Spending, Study Finds. “A new study gives ammunition to what health economists and health insurers have argued for years: When hospitals buy physician practices, the result is usually higher hospital prices and increased spending by privately insured patients… The Affordable Care Act has accelerated the trend by encouraging the establishment of Medicare accountable care organizations that pay large groups of providers based on how well they control costs and improve quality. The Federal Trade Commission has been watching the growing collaborations between hospitals and physicians, and until now has intervened to stop them only when one organizations controls so many physicians in one community that it is considered anti-competitive. Experts say the Stanford study could give the FTC ammunition to more closely examine and potentially block future hospital purchases.” (Kaiser Health News, 5.5.14)
    • Outpatient Departments More Costly Than Doc Offices. “Do hospitals hire physicians for the noble-sounding goal of ‘partnering’ or ‘aligning,’ or is it sometimes the prospect of an easy buck? A new study from the National Institute for Health Care Reform (NIHCR) suggests that the easy buck helps explain the current wave of practice acquisitions by hospitals. Researchers found that hospital outpatient departments may charge 2 or 3 times more for common diagnostic imaging, colonoscopies, and lab tests than if those services were rendered in community settings such as a physician’s office or a free-standing imaging or ambulatory surgery center… Drs. Reschovsky and White said that this payment differential has ‘likely… accelerated the trend of hospital acquisition of physician practices.’” (Medscape Medical News, 6.26.14)
    • Hospital-Employed Physicians Drive Up Costs, Say 16 States. “The attorneys general (AGs) of 16 states warn that hospital employment of physicians, which is considered in many quarters to be the inevitable fate of medical practice, is driving up healthcare costs without necessarily improving the quality of care. The AGs sounded this alarm last month in a federal appellate case in which the Federal Trade Commission is seeking to prevent St. Luke’s Health System in Boise, Idaho, from merging with Saltzer Medical Group in nearby Nampa on antitrust grounds. The AGs side with the government, as do America’s Health Insurance Plans, a trade association. The case spotlights the economics of hospitals employing physicians and the challenges of implementing the Affordable Care Act. Healthcare reform was the ostensible rationale for St. Luke’s, Idaho’s largest health system, to acquire the 40-physician Saltzer Medical Group, the state’s largest, independent multispecialty practice. Both parties viewed the merger as a step toward creating an integrated, more efficient system of care in which reimbursement depends on patient outcomes, not the volume of services. The Affordable Care Act is pushing hospitals and physicians in that direction. (Medscape Medical News, 9.2.14)
    • Hospitals Profit from Discount Program for Poor Americans. “Conti and Bach found that the 340B expansion is connected with hospitals’ acquisition of outpatient clinics. The hospitals are in low-income areas, and eligible for 340B. (The term for this kind of hospital is ‘DSH hospital,’ which abbreviates the term disproportionate-share hospital, and refers to having a disproportionate share of low-income patients in the area.) The outpatient clinics, however, tend to be in higher-income areas. To put it bluntly: The acquisitions of these outpatient clinics allow hospitals to arbitrage the discounted drugs from the low-income (uninsured) population to the high-income (insured) population.” Goodman, John. (Forbes, 10.8.14)
    • Some Hospitals Employing Physicians See Greater Losses. “Hospitals and health systems have been rapidly employing physicians to help meet the goals of healthcare reform, but the integration has been far from smooth, a new report notes. A study from the Kentucky Hospital Association, conducted by Laxington, Ky.-based accounting and consulting firm Dean Dorton Allen Ford, found that coal hospitals are incurring greater losses in 2014 than they did the prior year. The results were based on a survey of 20 hospital executives in or near Kentucky. A total of 58% of respondents reported losses exceeding $100,000 per physician in 2014, up from 41% in 2013.” (Modern Healthcare, 12.30.14)
    • What ’60 Minutes’ Didn’t Say: Hospitals Will Charge You More Under Obamacare. “As Obamacare becomes more entrenched—and the consolidation of hospitals becomes entrenched alongside—it will become more difficult to restore competition to the U.S. hospital market. At that point, we may have no choice but to treat hospitals like regulated utilities, with government price controls.” Roy, Avik. (Forbes, 1.12.15)
    • Visits to the Doctor Cost More as Hospitals Buy Practices. “The cost of visiting the doctor is climbing as hospitals scoop up a growing number of physicians’ groups, according to a Harvard Medical School study. Researchers found that when small doctors’ practices join large hospitals, their patients pay an average of $75 more every year for outpatient services like check-ups, even though the number of appointments stays the same. With data from cities across the United States, the study is the first to document the cost of physician acquisitions by hospitals on a national scale… The steady march of doctors into hospitals could continue thanks to the Affordable Care Act. That law encouraged the integration of different parts of the health care system in the hope that it will reduce costs. But Neprash warns that it could unintentionally have the opposite effect.” (Boston Globe, 10.19.15)
    • Undeserved Payments To Hospitals. “Section 603 of the bill would effectively force hospitals to stop pretending that physician offices and clinics they acquire as part of a merger are actually part of the main hospital campus. The distinction is important because Medicare pays outpatient clinics located at hospitals a lot more than it pays off–site clinics and doctors for the same services. For certain ambulatory surgeries, for example, Medicare pays roughly 80 percent more in a hospital outpatient department than in a freestanding off-site clinic…In fact, Section 603 is a much weaker reform than is needed. It would apply only to outpatient clinics acquired in the future.” (New York Times, 10.29.15)
  • Hospital Employment of Doctors Rising Rapidly. “The number of physician practices owned by hospitals and health systems jumped 86% from 2012 to 2015, according to a survey conducted by Avalere Health for the Physicians Advocacy Institute (PAI). The number of physicians employed by hospitals increased by nearly 50% during the same period, from 95,000 doctors in 2012 to more than 140,000 physicians in 2015, the survey shows. Hospitals acquired 31,000 practices during the study period, and 1 in 4 medical practices were hospital owned in 2015. Moreover, 38% of physicians worked for hospitals in that year, the report said. In comparison, a 2014 survey conducted by physician recruiting firm Merritt Hawkins for the Physicians Foundation showed that only 35% of physicians identified themselves as independent; among family physicians, the percentage dropped to 31%… The report also observed that when physicians go to work for hospitals, the health systems can charge Medicare more for ambulatory care services than the doctors could charge when they were in private practice. That is because of a feature of Medicare reimbursement policy that defines the practice site of hospital-employed doctors as the hospital outpatient department (HOPD), where care is reimbursed at a higher rate than it is in an independent physician office. An earlier PAI analysis developed by Avelere found that Medicare payments for three common services are up to three times higher when performed in an HOPD rather than in a physician-owned practice. (Medscape Medical News, 9.14.16)

Research and Analysis

  • Integrated Delivery Networks: A Detour On The Road To Integrated Health Care? “This paper reviews the rationales and evidence for horizontal and vertical integration involving hospitals. We find a disjunction between the integration rationales espoused by providers and those cited in the academic literature. We also generally find that integration fails to improve hospitals’ economic performance. We offer seven lessons from hospitals’ efforts to integrate and then suggest four alternative models for achieving integrated delivery of health care services. It may no longer make sense for providers to venture beyond the hospital’s walls to develop integrated solutions.” Burns, Lawton R, and Mark V Pauly. (Health Affairs, July, 2002)
  • The Performance of Integrated Delivery Systems. “Integrated delivery systems (IDSs) are vertically integrated health service networks that include physicians, hospitals, post-acute services, and sometimes offer health insurance… It has long been claimed that the greater care coordination provided by IDSs improve quality and outcomes at lower cost, in large part from elimination of duplication and unnecessary or avoidable care. A larger organization might, for example, streamline and consolidate common needs such as information technology and human resources, reducing costs… The trend is for greater integration between hospitals and physician practices. Prior work on IDNs does not provide confidence that this trend will produce better outcomes at lower costs.” Frakt, Austin. (Academy Health Blog, 7.20.16)
  • CMS Needs to Halt the March to Health Care Gigantism. “Last year saw 112 hospital mergers (up 18 percent from 2014), and the percentage of physician practices owned by hospitals doubled between 2004 and 2011. Yet, there is no evidence that consolidation of hospitals and physician practices leads to better clinical outcomes or cost reductions. In fact, recent studies suggest that small, physician-owned practices have a lower average cost per patient, fewer preventable hospital admissions, and lower readmission rates than hospital-owned practices. That is why it is so unfortunate that, as part of the largest rewriting of doctor payment rules in a generation, the Centers for Medicare and Medicaid Services (CMS) unwittingly has drafted regulations that—as currently proposed—further neglect the power of physician independence and create strong incentives for further consolidation in health care… There are a few changes they could easily make to improve the program.” Mostashari, Farzad, MD. (The Hill, 7.22.16)
  • How I Was Wrong About ObamaCare. “Well, the consolidation we predicted has happened: Last year saw 112 hospital mergers (up 18% from 2014). Now I think we were wrong to favor it… What I know now, though, is that having every provider in health care ‘owned’ by a single organization is more likely to be a barrier to better care. Over the past five years, published research, some of it well summarized on a Harvard Medical School site, has indicated that savings and quality improvement are generated much more often by independent primary-care doctors than by large hospital-centric health systems.” Kocher, Bob. (Wall Street Journal, 7.31.16)
  • Physician Employment by Hospitals Does Not Improve Quality. “The percentage of hospitals hiring physicians climbed from 29% in 2003 to 42% in 2012, but physician employment alone probably won’t improve hospital care, authors of a new study suggest. Kirstin W. Scott, MPhil, a PhD student in health policy at Harvard University in Cambridge, Massachusetts, and colleagues, published their findings online September 19 in Annals of Internal Medicine. The researchers looked at mortality rates, 30-day readmission rates, length of stay, and patient satisfaction scores for common medical conditions for 803 hospitals that switched to the employment model compared with 2085 control hospitals that did not switch. They found no association between switching to the employment model and improved outcomes in any of the quality metrics examined.” (Medscape Medical News, 9.19.16)
  • Changes in Hospital–Physician Affiliations in U.S. Hospitals and Their Effect on Quality of Care. “Up to 2 years after conversion, no association was found between switching to an employment model and improvement in any of 4 primary composite quality metrics… During the past decade, hospitals have increasingly become employers of physicians. The study’s findings suggest that physician employment alone probably is not a sufficient tool for improving hospital care.” (Annals of Internal Medicine, 9.20.16)

Impact of Facility Fees

  • The Downside of Merging Doctors and Hospitals. “The evidence suggests that an I.D.S. doesn’t always improve patient care and keep costs down. Some studies have found an I.D.S. is more likely to use evidence-based care or is better able to manage care. But other studies offer more mixed conclusions. A study published in Health Services Research found that after Minneapolis-St. Paul area hospitals acquired physician practices, there were small improvements in cancer screening and emergency room use. But it also found more unnecessary hospitalizations. Other research that examined 15 nationally prominent integrated delivery systems found no meaningful differences in the quality of care provided by their flagship hospitals, compared with their main competitors. And it turned out that the I.D.S. hospitals were more costly. A study published last year in JAMA Internal Medicine found that prices paid for outpatient care by private insurers are higher for organizations that employ more physicians, as integrated delivery systems do. One reason is that insurers pay an additional ‘facility fee’ for care provided in a hospital setting, even if the same care could be provided in a community clinic. ‘Many have presumed that consolidation is a prerequisite for higher value,’ said Dr. Michael McWilliams of Harvard Medical School, an author of the study, ‘but the only consistent finding from good research is higher prices.’” Frakt, Austin. (The New York Times, 6.13.16)
  • Facility Fees Cost Medicare Billions. “A new federal law may rein in facility fees that a government agency found cost Medicare hundreds of millions of dollars annually… Medicare paid $453 for an echocardiogram — a common heart test — at hospital-owned facilities. The fee for the same test performed at a privately owned physician’s office was $189, according to the 2014 report. In its 2012 report, Medpac found Medicare paid $124.40 for a 15-minute visit at a hospital-based practice compared to $68.97 at a private practice — an 80 percent difference… [MEDPAC] has long lobbied Congress to equalize payments between hospital-based and private physician offices, warning that Medicare spending would increase by $2 billion by 2020 if no action was taken. Congress instead included drastically ‘watered down’ reforms in the Bipartisan Budget Act that will do little to stem the growing costs, said Robert Berenson, M.D., of Washington, D.C., former MEDPAC vice chairman.” (Citizen’s Voice, 6.12.16)
  • Emergency Rooms are Monopolies. Patients Pay the Price. “There are 141 million visits to the emergency room each year, and nearly all of them (including Saifan’s) have a charge for something called a facility fee. This is the price of walking through the door and seeking service. It does not include any care provided. Emergency rooms argue that these fees are necessary to keep their doors open, so they can be ready 24/7 to treat anything from a sore back to a gunshot wound. But there is also wide variation in how much hospitals charge for these fees, raising questions about how they are set and how closely they are tethered to overhead costs. Most hospitals do not make these fees public. Patients typically learn what their emergency room facility fee is when they receive a bill weeks later. The fees can be hundreds or thousands of dollars. Vox worked with the nonprofit Health Care Cost Institute (HCCI) to analyze 70 million insurance bills for emergency room visits from between 2009 and 2015. We focused on the prices that health plans paid hospitals for facility fees, not the hospital charges (which can often be inflated well above what patients actually pay). We found that the price of these fees rose 89 percent between 2009 and 2015 — rising twice as fast as the price of outpatient health care, and four times as fast as overall health care spending. Overall spending on emergency room fees rose by more than $3 billion between 2009 and 2015, despite the fact the HCCI database shows a slight (2 percent) decline in the number of emergency room fees billed in the same time period.” (Vox, 12.4.17)

Hospital Mergers

    • The Risks of Hospital Mergers. “In retrospect, it looks as if Massachusetts made a serious mistake in 1994 when it let its two most prestigious (and costly) hospitals — Massachusetts General Hospital and Brigham and Women’s Hospital, both affiliated with Harvard — merge into a single system known as Partners HealthCare. Investigations by the state attorney general’s office have documented that the merger gave the hospitals enormous market leverage to drive up health care costs in the Boston area by demanding high reimbursements from insurers…The Affordable Care Act has incentives that encourage hospitals and doctors to integrate their operations and collaborate to control costs and improve care, and Partners has been a leader in doing that. At the same time, such collaborations must not be allowed to accrue such market power that they stifle competition and drive up prices, as seems to have happened in Massachusetts in past years.” (The New York Times, 7.6.14)
    • Yadkin Valley Community Hospital Shuts Down. “According to UNC-Chapel Hill health care economist Mark Holmes, rural hospitals across the country are affiliating with larger health care systems at an increasing rate. ‘In some cases, this has been a reaction to challenging finances – affiliation or merger with a larger system may offer a smaller rural hospital the only option to remain viable,’ Holmes said. ‘This can sometimes lead to a tension as the community gives up some of the local control that has historically been exerted by the hospital’s immediate community.’” (North Carolina Health News, 5.11.15)
    • Hospital Industry Split over Health Care Legislation. “[T]he current attorney general, Maura Healey, and House Majority Leader Ronald Mariano, a Quincy Democrat, filed a bill last month to strengthen the commission. The legislation would allow Healey to use the commission’s reports as evidence in court to temporarily block mergers. So far, the commission’s reports have focused on Partners HealthCare, the biggest health system in the state, and Lahey. It found that Partners’ proposed acquisitions of South Shore Hospital in Weymouth and Hallmark Health System’s hospitals in Medford and Melrose together could raise medical spending as much as $49 million a year, while increasing Partners’ market power. Partners contested the commission’s findings but, under pressure from Healey, ultimately gave up its bid for South Shore Hospital and put the Hallmark deal on hold.” (Boston Globe, 5.14.15)
    • Merger Mania is Sweeping the Hospital and Insurance Sectors. “Hospital groups, meanwhile, are looking for merger partners so they can counter the consolidated insurers with which they may have to negotiate reimbursements. Whether consumers will benefit from combat between big providers and big insurers is an open question, but some experts aren’t optimistic. Thomas Greaney, a healthcare antitrust expert at St. Louis University, labels the idea that insurers have to get big to counter the pricing power of ‘must have’ medical centers and specialty physician groups the ‘sumo wrestler theory.’ But as he wrote at Health Affairs this summer, ‘a showdown between the Sumo Wrestlers may result in a handshake rather than a serious wrestling match,’ in which a dominant insurer may bargain successfully with a dominant provider, but feel no incentive to pass its savings on to consumers.” (Los Angeles Times, 12.25.15)
  • ObamaCare and Big Insurance: The Justice Department Tries to Block the Mergers that Obama’s Health Law Intended. “Anthem-Cigna and Aetna-Humana would make U.S. health care more competitive to the extent that they counterbalance the provider cartels that ObamaCare also created. Local medical monopolies now dominate regions from Boston to Cleveland to Pittsburgh to the Bay Area. There is substantial economic evidence that these systems can command marked-up reimbursements that maximize revenue but are unrelated to better care. Thus the Federal Trade Commission, which oversees antitrust for providers, has been haplessly attempting to block the doctor and hospital merger wave. In May federal Judge John Jones rejected the FTC’s attempt to scotch the merger of Penn State Hershey Medical Center and Pinnaclehealth System in central Pennsylvania. Judge Jones rebuked the commission for ignoring ‘the health-care world as it is’ and remarked on the ‘no small irony that the same federal government under which the FTC operates has created a climate that virtually compels institutions to seek alliances such as the hospitals intend here.’ The FTC lost again this month, as an Illinois federal court refused to block the merger of two Chicagoland systems.” (Wall Street Journal, 7.24.16)

Impact on Service Delivery

  • Doctors Against Obamacare Say Fragmented Healthcare Puts Americans in Danger. “Many doctors, nurses and other healthcare workers think Obamacare and the nation’s medical system has evolved into fragments of wasted misalignments forced into place by politicians, health insurance corporations, pharmaceutical businesses, trial lawyers, hospitals, healthcare systems, and medical device manufacturers… ‘My office staff knows more than what a hospital system will know when it comes to individual patient care,’ Tedeschi expressed. ‘The hospital system practices fragmented medicine and offers a cook book of recipes mandated by codes, Medicare, and Obamacare. All of this fragmented medicine places the hospitals in a condition, or predicament, of the left hand not knowing what the right hand is doing.’” (Examiner.com, 10.24.14)
  • Affordable Care May Reduce Hospital Resources. “Local hospitals are bracing for a reduction in financial resources due to changes enacted by the Affordable Care Act. Frank Trembulak, chief operating officer and executive vice president for Geisinger Health System, called the act ‘not affordable or sustainable and needs to be revised significantly,’ at the January meeting of the Geisinger Authority board… While the ACA provides a path for more people to obtain insurance coverage, it also attempts to cover the majority of the increase by shifting costs onto insurers via taxes, reducing payments to hospitals and other care providers, and requiring additional funding from states that already have lean budgets, Trembulak continued.” (The Daily Item, 3.18.15)

Emergency Room Use

  • Does Expanding Health Care Coverage Reduce ER Visits? “Public officials from Health and Human Services Secretary Kathleen Sebelius to state governors in Michigan and Ohio have cited a reduction in traffic to overstressed emergency departments as a rationale for insurance expansion. They’d do well to change their talking points. The clear and compelling evidence that ER usage increases with Medicaid coverage is the latest finding to come out of the landmark Oregon Health Insurance Experiment, which randomly selected low-income uninsured adults in Oregon to receive health insurance through the state’s expansion of Medicaid… Thursday’s Science study has the potential to be the most influential of the trio of papers that have come out of the OHIE so far, both because of the magnitude of the impact (a 40 percent increase is a very large effect) and also because reasonable people (my wife and Kathleen Sebelius, for example) disagree on the likely effect of Medicaid expansion.” (Slate, 1.2.14)
  • More Patients Flocking to ERs Under Obamacare. “Nationally, nearly half of ER doctors responding to a recent poll by the American College of Emergency Physicians said they’ve seen more visits since Jan. 1, and nearly nine in 10 expect those visits to rise in the next three years. Mike Rust, president of the Kentucky Hospital Association, said members statewide describe the same trend. Experts cite many reasons: A long-standing shortage of primary-care doctors leaves too few to handle all the newly insured patients. Some doctors won’t accept Medicaid. And poor people often can’t take time from work when most primary care offices are open, while ERs operate round-the-clock and by law must at least stabilize patients. Plus, some patients who have been uninsured for years don’t have regular doctors and are accustomed to using ERs, even though it is much more expensive. ‘It’s a perfect storm here,’ said Dr. Ryan Stanton of Lexington, president of the Kentucky chapter of the ER physician group.’We’ve given people an ATM card in a town with no ATMs.'” (USA Today, 6.8.14)
  • Emergency Room Visits Up after Obamacare Implementation, Survey Says. “On Wednesday, a Wall Street Journal story stated: ‘Early evidence suggests that emergency rooms have become busier since the Affordable Care Act expanded insurance coverage this year, despite the law’s goal of reducing unnecessary care in ERs.’ It might be time to consider whether emergency use is increasing not ‘despite’ of coverage expansions, but because of them. The Journal story is based on online survey of emergency room doctors prepared for the American College of Emergency Physicians and conducted in early April. The headline finding was that 46 percent of respondents said that the volume of emergency patients in their departments had increased since Jan. 1, when Americans began receiving coverage through President Obama’s health care law, compared with 23 percent who said it decreased. Another 27 percent said volume remained the same. Looking forward, 86 percent expect visits to increase over the next three years.” (Washington Examiner, 6.21.14)
  • With Health Law, ERs Still Packed. “Experts thought if people bought health insurance through the Affordable Care Act, they would find a private doctor and stop using hospital emergency rooms for their primary care. Well, more people have health insurance. But they are still crowding into emergency departments across the nation…’It’s back to the old days,’ said Christopher, an avowed supporter of the ACA. ‘A lot of emergency department overcrowding, a lot of patients.'” (Kaiser Health News, 8.18.14)
  • Since Obamacare, ER Visits Down at L.A. County Public Hospitals, Up at Private Hospitals. “During the first three months of expanded health insurance coverage required by the federal Affordable Care Act, emergency room visits by patients who didn’t require hospitalization increased 1.7% in the county compared with the same period last year, a Los Angeles Times analysis of data from 75 hospitals shows… In the first three months of this year, most privately-run hospitals in Los Angeles County saw increases in emergency room visits, pushing their numbers above the countywide average, state data shows.” (Los Angeles Times, 8.21.14)
  • Yes, Medicaid Expansion Increases Hospital ER Visits, but Only Temporarily.  “A new California study replicates an earlier finding from Oregon that the newly insured visit emergency rooms more. But luckily, California found that the boost wasn’t permanent. The paper, from UCLA’s Center for Health Policy Research, found that ER use was higher among new enrollees in California’s Low Income Health Program, the state’s Medicaid-like program. However, it also found that the spike was temporary. At first, the newly insured Californians used ERs at the relatively high rate of 600 visits per 1,000 people. But between 2011 and 2013, their ER usage declined by nearly 70 percent, to 183 visits per 1,000 people. Their hospital admissions also declined by 79 percent.” (The Atlantic, 10.15.14)
  • Contrary to Goals, ER visits Rise Under Obamacare. “Three-quarters of emergency physicians say they’ve seen ER patient visits surge since Obamacare took effect — just the opposite of what many Americans expected would happen. A poll released today by the American College of Emergency Physicians shows that 28% of 2,099 doctors surveyed nationally saw large increases in volume, while 47% saw slight increases…Experts cite many root causes. In addition to the nation’s long-standing shortage of primary care doctors — projected by the federal government to exceed 20,000 doctors by 2020 — some physicians won’t accept Medicaid because of its low reimbursement rates. That leaves many patients who can’t find a primary care doctor to turn to the ER — 56% of doctors in the ACEP poll reported increases in Medicaid patients.” (USA Today, 5.4.15)
  • How to Solve the ER Problem. “In Seattle, an unusual partnership seems to have found a solution. Group Health Cooperative of Puget Sound, a nonprofit that provides health care and insurance, and SEIU Healthcare NW Health Benefits Trust, which delivers health benefits to thousands of home health care workers, have reduced emergency room use among a subset of the trust’s membership by 27 percent over four years.” Emanuel, Ezekiel. (The New York Times, 5.6.15)
  • Doctors ‘Reluctant’ to Take Obamacare Patients: Hospital CEO. “Obamacare has failed to deter emergency room visits because many patients have no choice when they can’t get an appointment with a primary-care physician, the founder of hospital operator Universal Health Services said Friday. While the millions more who have health insurance certainly play a part in the doctor shortage, Alan Miller told CNBC’s ‘Squawk Box‘ that poor reimbursement rates for primary-care physicians is also a major factor. ‘They get a better reimbursement when they take care of people that have insurance from their employer,’ the Universal Health chairman and CEO said. ‘The doctors are reluctant to schedule appointments’ with patients who have government plans.” (CNBC, 5.15.15)
  • Newly Insured Treasure Medicaid, But Growing Pains Felt. “A withering audit by the state of California released this summer found that regulators could not verify if health plans had enough doctors in their Medicaid networks or if the distances patients had to drive were unreasonable. The audit also found that the state’s call centers were overwhelmed, with phone representatives answering just half of incoming calls. And too often, those obstacles have forced patients to seek help in expensive hospital emergency rooms.” (Kaiser Health News, 10.2.15)
  • Obamacare Has Barely Made a Dent in ER Visits. “A government report published Thursday shows Obamacare is still far from achieving one of its goals… The biggest changes between 2013 and 2014 were decreases seen among patients with Medicaid who visited the ER and uninsured adults who went more than once. The report sheds light on whether these factors influenced ER use. It found most people who go to the ER – 77 percent – go because of the seriousness of their condition, which could reflect that a doctor told them to go or they were taken there by an ambulance, among other things. These rates remained mostly unchanged from 2013 to 2014. But the report also revealed that nearly 12 percent of ER patients went because their doctor’s office wasn’t open. Small decreases were observed in the percentages of people with private insurance and people on Medicaid, though results showed a slight increase among the uninsured.” (US News and World Report, 2.18.16)
  • Increased Emergency Department Use in Illinois After Implementation of the Patient Protection and Affordable Care Act. “The same dynamic observed after Massachusetts health reform may be occurring in Illinois after ACA health insurance expansion. Low-income adults in 2 Medicaid expansion states were more likely to have a usual source of care outside the ED after Medicaid expansion, but also more likely to have an ED visit because an office visit was unavailable. Having a usual source of care does not necessarily confer access to timely and effective outpatient care, particularly after hours, on weekends, or when care is thought to be too time consuming or complex for the office. A 2013 survey of Medicaid providers in 15 metropolitan areas found that an average wait time to consult a physician was 18.5 days, with a metropolitan high of 45.4 days (Boston)… ED visit volume among patients aged 18 to 64 years increased modestly but significantly in Illinois after ACA health insurance expansion, but hospitalizations through the ED did not. A large post-ACA increase in Medicaid visits and a modest increase in privately insured visits outpaced a large reduction in ED visits by uninsured patients. These changes are more than can be explained by changes in insurance coverage alone and have persisted for the 2 years since ACA implementation. However, it is still unknown whether these results represent longer-term changes in health services use or a temporary spike in ED use because of pent-up demand.” (Annals of Emergency Medicine, 8.25.16)
  • California ER Use Jumps Despite Medicaid Expansion. “California is the latest state to report that emergency room usage is up despite expanding Medicaid eligibility. Emergency room visits by people on Medi-Cal, the state’s Medicaid program, rose 75% over five years from 800,000 in the first quarter of 2012 to 1.4 million in the last quarter of 2016, according to California’s Office of Statewide Health Planning and Development. Similar findings have also been noted in studies on Illinois, Massachusetts and Oregon. The trend contradicts what policy experts thought would happen if people gained more insurance coverage…  ‘There has not been an increase in physicians willing to see Medi-Cal patients, mostly because the payment rates are so low,’ said Jan Emerson-Shea, a spokeswoman for the California Hospital Association. Therefore, newly enrolled Medi-Cal patients continue to seek care in hospital ERs because they cannot access primary care in physician offices and clinics.” (Modern Healthcare, 6.16.17)
  • Local Hospital Emergency Rooms Overwhelmed Since Passage of Affordable Care Act. “Emergency room visits are up 29 percent in Kern County since 2009 when the Affordable Care Act was passed, running counter to one of the key takeaways from the law: that they would decrease as consumers take advantage of preventive care. The problem?…  Medi-Cal was expanded under the ACA, meaning more people have an insurance card. But the number of primary care doctors accepting Medi-Cal hasn’t kept up with demand, especially in the Central Valley, and people are still going to ERs for basic care. ‘People are using the emergency room as their primary care office.’” (Bakersfield.com, 6.18.17)