The Poor Get Poorer: The Fate of Distressed Hospitals Under the Affordable Care Act0

This article, written by Samuel R. Maizel and Craig Garner, first appeared at 2012 No. 12 Norton Bankr. L. Adviser 1 in December 2012. 

Synopsis

Distressed hospitals in America operate on small or non-existent profit margins.3 For many of those hospitals, the federal Medicare program and the individual States’ Medicaid programs are the largest payors. While the Patient Protection and Affordable Care Act of 2010 (the “Affordable Care Act”) was designed in part to increase the number of insured nationwide, the result of which should be positive for hospitals, any cause for celebration must first address the cost containment provisions in the Affordable Care Act that create new concerns for financially distressed hospitals. Included among the multitude of provisions in the Affordable Care Act are an immediate 1% cut in Medicare revenue, phased in reductions in disproportionate share payments to hospitals, future, permanent penalties of up to 1% of Medicare payments for hospitals which perform poorly under the Hospital Value Based Purchasing Program, and additional penalties for hospitals with unacceptable rates of re-admission or too many hospital acquired conditions rates.4 Together these cuts create a daunting challenge for the many financially distressed hospitals in America that simply lack the resources to establish an infrastructure designed to treat Medicare patients in this era of change.

Background

Medicare is the federal program that provides health care coverage to individuals aged 65 or older. Medicaid offers similar access for medical services on a state level for qualifying individuals, many of whom are poor. Medicaid covers 69 million people.5 By 2020, under the Affordable Care Act the number of Medicaid beneficiaries is likely to increase to 93 million.6 Combined, Medicare and Medicaid pay for more than half of the annual hospital bills in America. … Read more →

A Lesson from the Sneetches0

This Practitioner Application to the article “Post Acute Care and Vertical Integration After the Patient Protection and Affordable Care Act” (by Patrick D. Shay and Stephen S. Mick) appeared in the January/February Edition (Volume 58, No. 1) of the Journal of Healthcare Management.

In his classic tale “The Sneetches,” Theodor Seuss Geisel (Dr. Seuss, 1961) created a society divided by entitlement in which the lines of separation were removed, thrusting its members together. A satire about discrimination, “The Sneetches” offers children an early introduction to the arbitrary walls that those forces governing society can build and destroy at their whim.

Shay and Mick may be said to describe a similar scenario as they apply provisions of the 2010 Affordable Care Act (ACA ) to post-acute care and vertical integration under the Medicare Shared Savings Program (also known as accountable care organizations or ACOs) and to bundled payment systems. They note that these are the areas in which the influences of the ACA are most apparent. In the process, Shay and Mick remind us that perception is formed largely on the basis of factors lurking beneath the surface that care little for public opinion. For example, much like Dr. Seuss’s Sneetches, Hurricane Sandy, which struck the East Coast shoreline in October 2012, rendered the “haves” and “have nots” almost indistinguishable. Bellevue Hospital, the oldest hospital operating in the United States, was capable of offering roughly as much care during and immediately following the hurricane as it was in 1736, when the New York City Almshouse designated six bedrooms as Bellevue’s first “ward.” … Read more →

Health Care Reform: Walking the Fine Line Between Epic and Tragic0

This article was first published at California Healthcare News on January 8, 2013.

The recent changes to the core structure of modern American health care are nothing short of epic, rivaled in historic scale only by the introduction of Medicare in 1965. Although each decade over the past 50 years has in some way used government programs and incentives in an attempt to urge health care to undergo recalibration as a means to establish industry stability, by the end of the first decade of the 21st Century it had become evident that health care in the United States was fast becoming unsustainable as it existed. Enter health care reform.

Three years after the Federal Government passed the Affordable Care Act in an attempt to right the sinking ship, we the people are still waiting for the tide to turn. Having survived last summer’s monumental challenge before the United States Supreme Court and a presidential election in November, the Affordable Care Act has not only emerged as the law of the land, it has cemented its place as health care’s blueprint throughout America for decades to come. For California, however, the timing is unjust, as the perfect storm brought about by fiscal cliff/debt ceiling concerns heads straight for Sacramento from the east just as health care’s versions of Scylla and Charybdis approach forebodingly from both north and south. … Read more →

Winter Journal 20130

I am pleased to share with you a collection of my most recent writings on the Affordable Care Act, all of which can be accessed through this link: Click Here for the Winter Journal 2013

The recent changes to the core structure of modern American health care are nothing short of epic, rivaled in historic scale only by the introduction of Medicare in 1965.  Although each decade over the past 50 years has in some way used government programs and incentives in an attempt to urge health care to undergo recalibration as a means to establish industry stability, by the end of the first decade of the 21st Century it had become evident that health care in the United States was fast becoming unsustainable as it existed.

Having survived last summer’s monumental challenge before the United States Supreme Court and a presidential election in November, the Affordable Care Act has not only emerged as the law of the land, it has cemented its place as health care’s blueprint throughout America for decades to come. Unfortunately, the speed at which health care reform appears to move can at times be dizzying, and its demands are often draconian at first glance.

History has shown that health care in the United States is resilient, and often finds ways to surprise even its toughest critics. Though it is too soon to predict the future of health care in the United States, the value of historical information pertaining to the evolution of our health care system should not be discounted.  Only through the combination of historical perspective and modern-day analysis have I been able to understand the essence of the Affordable Care Act.

It is my hope that the following articles will provide the reader with similar guidance.

Very truly yours,

Craig B. Garner