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Hospital CFOs Don't Share Wall Street's Optimism About PPACA

Rene Letourneau, for HealthLeaders Media, January 27, 2014

Marlene Zurack


Marlene Zurack, SVP and CFO
NYC Health and Hospitals Corporation (HHC)

HHC's DSH payments will drop from $818 million in fiscal year 2013 to about $400 million by fiscal year 2019, Zurack reported.

"It's the cuts to disproportionate share funding that are really, really hurting us. Because of that, there is no net benefit to us… Those were the cuts that were traded to pay for the Affordable Care Act. That is where we have a large problem," she said.  

Stephen Forney, vice president and CFO at Lovelace Health System, a 606-bed system based in Albuquerque, NM, said last spring that one major concern he has about the PPACA is that patients who become insured through the exchanges may not have a full understanding of their liability because most will be moving off of state-run insurance initiatives that generally have no or low premiums and co-pays.

'Sticker Shock' for the Newly Insured
"These initiatives are going to be subsumed by the exchanges, and the new products are going to have significant patient liability and premiums. That is going to be a bit of a sticker shock for those individuals who have not been used to that in the past," Forney said.

This patient population, which has traditionally sought care through the emergency department, "is going to access care in non-acute settings in a fuller fashion," he said. "When the doctor refers them to the hospital for a CAT scan or a procedure, they probably won't have the ability to pay for that out of pocket. It will diminish some uncompensated care in the ER and shift it to other sites… In a sense, what you are going to do is encourage utilization in non-acute sites by patients who can't pay the patient liability portion."

While Wall Street executives see hospitals as a bright spot on the healthcare reform landscape, it's difficult for me to buy into that theory completely. Despite hospitals' best efforts to mitigate the financial fallout from the PPACA—such as hiring onsite navigators to help patients enroll in a health plan or determine if they qualify for Medicaid and rolling out marketing campaigns to educate their communities on the new healthcare legislation—hospitals are still in danger of taking a big hit, according to most of the healthcare CFOs I've spoken to recently.  

Perhaps hospitals will fare better than most sectors in the long run, as Wall Street believes, but the jury is still out as to whether or not healthcare reform and the health insurance exchanges will be a significant boon to hospitals' bottom line.

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