Cuts, indigent costs and Supreme Court could force changes in health care

Costs, cuts could force industry to make adjustments

Providers are likely to be a little woozy this year after a number of factors – including increasing indigent costs, cuts and mergers – shake up the health care landscape, Augusta hospital leaders said.

The U.S. Supreme Court is expected to rule in the spring on the constitutionality of aspects of the Patient Pro­tection and Affordable Care Act. The presidential election, with many Republican candidates lambasting the health reform law, could also affect its fate. Though some provisions have yet to take effect – notably the ability to buy health insurance through state exchanges and the individual mandate to have it – much of it is already in place.

“Depending upon what happens in the election they could certainly modify that, but I will tell you that they have pushed very hard in Washington to institute as much of the Patient Protection and Affordable Care Act as they possibly can,” said Jim Davis, the CEO of University Hospital. “Unwinding that is going to be very, very difficult to do. And no one has a better solution right now.”

On the local level, Univer­sity is in the process of acquiring McDuffie Regional Medi­cal Center, which had struggled to get access to capital to modernize its facilities. University has also acquired a number of physician practices and is negotiating with more.

That trend can be seen nationally in Pennsylvania, with Highmark Inc. affiliating with West Penn Allegheny Health System, and with UnitedHealthcare acquiring 2,000 physicians in southern California, said David Hefner, the executive vice president for clin­ical affairs for Georgia Health Sciences University. With cuts to reimbursement now pending, you need more size and volume to achieve a working margin, Davis said.

“What a lot of organizations are starting to figure out is that it is very hard to do unless you become part of bigger organizations where you can get economies of scale,” he said. “Scale is going to be a big thing as consolidation is forced upon our industry due to the need to reduce cost. I think you’re going to see a lot of that in health care over the next year or two.”

Hefner said it “could be the new normal” as the factors play off one another.

The recession has resulted in more
uninsured. University projects its indigent costs will have doubled in three years by the end of 2012.

As more people lose their jobs and health insurance, the more likely they are to put off routine care, Davis and Hefner said. Now sicker, they show up in emergency rooms and hospital settings where the care is more expensive, increasing costs.

The Medicaid rolls also swell as more are eligible and strain state budgets as the federal government seeks to cut its share of Medicaid funding, Hefner said.

Cost and demand increase at the same time.

“You have a socioeconomic cascade that is occurring in those populations of people that are at risk or more vulnerable,” he said. “That could be adults and children. These are forces that are combining, rather than individual.”

This year could see the beginning of trends that play out in years to come, Hefner said.

“In terms of health care, no matter what, over the next 10 to 20 years, we’re seeing a fundamental retooling,” he said. “There’s a lot that is going to continue to shake out and change.”

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