I don't see hospitals padlocking their doors in depressed areas of the country. It happens, but very infrequently. I don't see former hospital CEOs standing in bread lines or wearing sandwich boards. In fact, I see a healthcare system in the US that is still quite healthy overall—at least financially.
In fact, as I wrote a couple of months ago in this space, there is a valid argument out there that cross-subsidization is a waxing, not a waning, force in healthcare today. So maybe a 1% increase is about right, considering the level of disappointment (largely muted) emanating from the usual hospital lobbying groups.
Hospital investment is seen as a golden opportunity, in fact, for several for-profit hospital companies, and even strong nonprofits are on the acquisition trail. Ultimately, I believe that national policymakers have decided that small hospitals are whirlpools of inefficiency in a vast sea of waste, and that this kind of weak updating of payment rates, combined with the tools of ICD-10 compliance, meaningful use standards, and several other national initiatives will serve as a blunt tool to encourage consolidation and efficiency.
Whether a 1% increase next year will make hospital leaders' lives incrementally more difficult is really beside the point.
The question is whether years of 1% increases will ultimately result in some hard decisions on consolidation over the long term. When the breaking point is reached is different for every organization, but many CEOs should have an idea of what that level is.
Too many, in my estimation, don't. At least not until it's too late.