Nonprofit Hospital Outlook 'Negative' in 2014

John Commins, for HealthLeaders Media , December 2, 2013

HLM: Is 'negative' the new reality or is there something out there that would indicate that we might turn a corner on this?

Steingart: It doesn't look that way. You might see a big positive surprise somehow on the exchanges and insurers in general. If you can create a scenario where things start to work really well and is all of a sudden signing up people in droves and many young people sign up and keep the pool actuarially sound such that it creates a positive feedback loop and health insurance companies aren't forced to slash the rates they pay hospitals on the exchange, then yes, you can create a scenario where that plays out. I am not assigning percentages to that but there is a much lower probability of that happening than the way things seem to be going.

HLM: What's behind the revenue declines?

Steingart: It's a mix of many things. The Affordable Care Act—and this is the scary part—is only a small part of that. There have been some Medicare reductions that have come through because of that but the ACA payment reductions only began Oct. 1. You are not seeing that in our numbers. That is more a combination of lower volumes and the cumulative effect of what have been very low reimbursement increases from insurance companies that are starting to play out and changes in how folks are being treated and accessing the system.

Some of that is in response to changing contract incentives. Even if a small number of contracts are not fee-for-service, if you are managing patient flow and protocols in your movement toward population health and lower utilization, you're doing that already. You are not going to do the wallet biopsy when someone comes in because this guy is in the Blue Cross plan that pays us more along quality and lower utilization and more like a capitation and this other guy has a traditional fee-for-service plan therefore we are going to run up the tests on the second guy.

You treat all the patients the same. If you start implementing these methods to reduce readmissions and make sure all of your physicians are coordinating with one another and reducing duplicate tests, that is actually hurting you now. Even though it is only benefitting you for a small number of patients you have to do it for everybody.

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