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6 Revenue Pressures Create Negative Outlook for NFP Hospitals

Rene Letourneau, for HealthLeaders Media, June 30, 2014

1. Declining utilization

As hospitals improve quality and outcomes, they are driving down their own utilization rates, Arrick says.

"One of the big contributors to the ongoing pressures we are seeing is the decline in use rates. A lot of that goes back to hospitals doing a better job delivering care, and that is going to reduce their use rates over time," he says.

He believes that high-deductible health plans will continue to put downward pressure on utilization because "folks have more and more of their own dollars at play. People don't want to spend their own dollars and are becoming a lot more cost-conscious. Price consciousness among the insured is really at the beginning state, and as it grows, it will only be harder for folks in hospitals."

Utilization rates may go up as more people become insured through the health insurance exchanges and Medicaid expansion, but Arrick said this trend will be short-lived and is not enough to offset the current pattern of declining healthcare consumption in the long run.

"All of a sudden we've had a big boom with the ACA, and all indications are that the number of uninsured is dropping. … I think we are going to see a big bump in volume as these folks now have insurance cards, but I think this will be a short-term bump up in volume, while the long-term trend line is going to go down."

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