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Not Worried About the Fiscal Cliff? You Should Be

Philip Betbeze, for HealthLeaders Media, December 21, 2012

Now managing director and executive vice president of healthcare at Warbird Consulting Partners, Fenstermaker says it's understandable that many senior executives are ignoring the fiscal cliff negotiations because they have no control over them.

"But if the economy goes over the fiscal cliff, all of it goes over, including healthcare," he says.

Most hospitals would not face the Medicare cuts immediately, but would have to immediately plan for how to deal with them—even though Congress could reach a deal after sequestration has taken effect, and could retroactively deal with any cuts made to Medicare hospital payments, for example.

"They wouldn't act in a panic mode," Fenstermaker says of executives, "but they would have to take the loss and use 2013 to plan for dealing with it going forward."

That's because Fenstermaker says hospitals and healthcare systems shouldn't count on getting those Medicare funds back in a post-cliff deal.

"Let's assume for the sake of argument that they go over [the cliff] and Medicare gets cut by 2%," he says. "When they cut a deal, I don't believe hospitals will be compensated for that. It's an easy cut, Medicare payments to the hospital. The hospitals eat the cost, just like they will eat the $500 billion in costs from the ACA [Patient Protection and Affordable Care Act]."

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