Since President Obama signed the healthcare reform bill into law in March 2010, medical professionals and organizations have been wondering: “how will this bill affect us?”
Will the changes in hospitals be for better or for worse? The jury is still out, but there is no doubt that most hospitals will face major financial and professional adjustments.
Some say hospitals have little to fear, as the higher population of newly insured people will benefit hospitals that currently treat great numbers of uninsured. The bill’s expansion of Medicaid in particular would erase most hospitals’ bad debt within five years. However, the expansion won’t take effect until 2014, and in the meantime, hospitals may have to look for mergers as a way to lower expenses.
Expanded enrollments in the low-income Medicaid program are expected, and this could be a mixed blessing. Medicaid typically pays hospitals less than the actual cost of care. It remains to be seen whether hospitals were already treating many of these patients without any reimbursement at all, or whether they will now see an influx of new money-losing Medicaid customers.
Hospitals are also giving up $155 billion in Medicare funds over the next decade, or about an 8 percent cut, but they are expected to gain $170 billion because of fewer uninsured patients. Whether this actually happens remains to be seen.
Eventually, Medicare payments will be tied to productivity. The bill puts an emphasis on quality care by examining issues like patient re-admissions and infections by linking payments to improvements.
In regards to both Medicare and Medicaid, the health care reform bill stresses what is known as value-based purchasing, which compares patient treatment outcomes and cost. The best outcomes for the least amount of money will become the standard, and hospitals that meet the requirements will see a bump in federal payments for care, according to the experts.
Hospitals will be under pressure to be more efficient. They will need to identify and reduce waste and be more cost efficient, as their employees will be asked to work harder and provide more services for more people.
Healthcare reform will require hospitals to collaborate more closely with physicians and other providers. According to Chip Kahn, president and CEO of the Federation of American Hospitals, “Going forward, success will require sustained effort and unparalleled cooperation from everyone on whom Americans rely for their healthcare, including hospitals, physicians and other caregivers, and insurers.”
It is clear that the existing business model for most hospitals won’t work under the healthcare reform laws. There will be changes in the way hospitals deliver care and in how much funding they receive, and those who expect to survive must make plans now to embrace the new future of healthcare.
If you have any questions or would like to discuss how the healthcare reform law will affect your workplace, please contact Morgan Hunter HealthSearch today.