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How Obamacare May Boost Hospital Emergency Department Profits

John Commins, for HealthLeaders Media, May 13, 2014

With more people able to purchase health insurance under the healthcare reform law, a Health Affairs study projects that hospital emergency departments could generate an additional 4.4% in profits in the coming years.

Emergency departments will likely become money makers for hospitals as the Patient Protection and Affordable Care Act gins up and more insured patients walk through the doors, a study in Health Affairs suggests.

Michael Wilson, MD, an emergency physician at Boston's Brigham and Women's Hospital, and a healthcare economist, says the study he coauthored with Harvard economist David M. Cutler estimated that hospital emergency department revenues exceeded costs by $6.1 billion in 2009, representing a profit margin of nearly 8%.

The black ink was due largely to the $17 billion in profits EDs made from privately insured patients that covered underpayments for money-losing Medicare, Medicaid, uninsured and unreimbursed care.

The uninsured represent about 18% of patient volume in EDs and Wilson says that about 25% of those uninsured patients will gain coverage either through the health insurance exchanges or the Medicaid expansion. With more people insured under the PPACA, Wilson's study projects that hospital EDs could generate an additional 4.4% in profits in the coming years.

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