It's impossible for healthcare finance executives to know for sure what impact the health insurance exchanges will have on their organizations' bottom lines. Even so, Ascension Health affiliates across the country are forecasting, planning, and educating.
Although it's impossible for healthcare finance executives to know for sure what impact the health insurance exchanges will ultimately have on their organizations' bottom lines, they are nonetheless responsible for budgeting, planning, and leading through these uncertain times.
I recently asked four senior executives from St. Louis–based Ascension Health—the nation's largest not-for-profit health system, which operates 113 acute care hospitals and dozens of other facilities in 22 states and Washington, D.C.—about their expectations and their efforts to prepare for how the online marketplaces will translate into the real-world business of providing healthcare when coverage begins on Jan. 1, 2014.
Katherine Arbuckle, senior vice president and CFO for the system, says the financial consequences of the HIX hinge on four key factors:
- How they impact patient volume
- How HIX affect the number of existing uninsured patients who become insured
- How HIX influence the number of insured patients who move to exchange products from employer-sponsored plans
- Ascension's negotiated rates with payers
"Those four factors are going to affect our revenue," she says.
Patrick McGuire, CFO at Warren, Mich.–based St. John Providence Health System and the Michigan Ministries of Ascension Health, says he and his team have done a great deal of predictive modeling on the different possible financial implications of HIX.
"We've analyzed this situation in so many ways because there are so many unknowns," he says. "The best-case scenario is someone who is currently uninsured who we are providing care to, and they end up getting insured. In that case, we have all the cost already and now we are going to just get pure revenue."
A lot depends on which plan consumers select—something that will likely be based largely on their income levels and their eligibility for government premium subsidies, McGuire notes.
"We are not sure how many people are going to select which plan.…If everyone picks the bronze plan, then that could be very negative. We've analyzed this in a lot of different ways, and no one really knows for sure what the actual experience will be until we start getting data."
While McGuire is preparing for the possibility of a net negative to revenue, he also sees a possible silver lining amidst all the ambiguity.
"Businesses have pushed a lot of cost to associates by moving to high-deductible plans, and a lot of that ends up being bad debt. The exchanges may make healthcare more affordable, and people may be able to buy a plan that provides better coverage. That is definitely one of those things we've modeled in a lot of different ways," he says.
Jason Dinger, CEO of MissionPoint Health Partners in Nashville—an ACO affiliated with Ascension member Saint Thomas Health—is optimistic about the possibility of seeing an increase in the insured population in his region, which could translate into more revenue in the future.
"We believe there will be a number of currently uninsured folks that are going to sign up given the low barrier to entry for the plans. The price points are very competitive, and we think we'll see an increase in volume and in coverage for the traditionally uninsured population," he says.
Although hospitals and health systems have to wait and see how they fare as the exchange products roll out, Ascension's executives say they are taking steps now to educate their communities on the different plans because it could prove costly if patients believe they have more coverage than they actually do.
Paula Campbell, senior vice president and CFO at Austin, TX–based Seton Healthcare Family, says the probability of patients not understanding their plan is "absolutely a concern."
To mitigate the potential negative impact, Seton is working with its collaborative of community healthcare providers to offer enrollment assistance and is currently determining a plan for how to allocate resources to its education efforts.
"We are estimating we will need two hours per encounter to educate patients on their options," Campbell says. "We really have to think about how to do this in the most cost-effective way.…The goal is to redeploy and retrain staff and not to add staff, but from a financial standpoint, we will still be investing those resources."
McGuire says St. John Providence is using certified application counselors to provide badly needed education to patients.
"They are helping people understand the options. The general population is starting at a low level of understanding of what is in these policies and what the Affordable Care Act is," he says. "We have had a number of people who believe this is a government program that is going to give them free insurance.…I think we needed to add more resources because the education effort is going to be more significant than we had anticipated. At least during the enrollment period, it is going to be very resource-intensive."
Likewise, Dinger says MissionPoint has certified application counselors working to assist patients.
"We are spending a good bit of time helping folks understand how the program works, when the coverage starts, when they have to make their payments. So we are answering a lot of questions around the program itself, let alone what plan to select," he says.
Dinger believes working closely with patients not only will help protect MissionPoint's revenue, but it is also a good reminder of how important the exchange products will be to people who have been uninsured.
"Some of these folks who are uninsured know what benefits they need more than insured folks do. They've been pinching pennies to cover medicine and doctors visits, and they know exactly how much they are spending now. It has certainly been humbling to engage these folks and, more importantly, it offers up an example of the policy promise of bringing healthcare to all and impacting our communities in positive ways and ending a lot of suffering."
Arbuckle echoes that sentiment and says that, despite the many uncertainties around the potential financial impact of the exchanges, Ascension Health believes in the goal of providing insurance coverage to more people.
"The environment is rife with uncertainty, and it is difficult to operate complex health systems with so much uncertainty," she says. "However, we think healthcare is a fundamental right in this country, and to keep people from accessing care because of a system that is employer-based is not good public policy. We are hoping the exchanges have a lot of success."