"The most vulnerable hospitals will be major safety-nets in urban areas that are currently treating patients who don't have health insurance and that are dependent on local funding and disproportionate share funding," says Bruce Siegel, MD, MPH, president and CEO of the National Association of Public Hospitals and Health Systems, a Washington, D.C.–based organization that lobbies on behalf of its members. "We'll see this funding drop, and will also see continued pressure on the local funding side because of the economy."
Those dollars lost will be significant, he adds. An NAPH study released late last year found that hospitals could face an increase in uncompensated care costs of $53.3 billion by 2019 if a substantial number of states do forego expansion, coupled with an estimated loss of $14.1 billion in disproportionate share funding.
For most safety-net hospitals, many of which already get by on local tax subsidies, such a drop in revenue could be devastating not only for them but for other hospitals in their states, which would presumably see increased bad debt and funding shortfalls where treating the uninsured is concerned.
Revenue issues apply statewide
Safety-net hospitals will initially bear the brunt of their states' decisions not to expand, says Siegel.
"If you're a hospital today that has mostly paying patients and very little charity care, you should be okay, at least in the short term," says Siegel, who previously served as president and CEO of Tampa General Healthcare and also of New York City Health and Hospitals Corporation.
"You're not counting on coverage expansion and you don't need disproportionate share and you're probably not getting much of it right now anyway. But if you're a safety-net hospital, you have potentially the worst of all possible worlds."
For John Haupert, CEO of Atlanta's 650-staffed-bed Grady Health System, that could mean an annual loss of tens of millions in reimbursement for an already fiscally challenged public hospital system.
By 2016, when disproportionate share funding scales back to 50% of its current levels, "we lose $45 million a year," he says.