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Nonprofit Hospital Outlook 'Negative' in 2014

John Commins, for HealthLeaders Media, December 2, 2013

HLM: How will mergers and acquisitions and the consolidation of healthcare affect or offset these lower reimbursements?

Steingart: It is somewhat speculative. There is a lot of talk in the press right now about making hospital systems and physician groups too monolithic, too large, and [that] they are going to extract higher prices as a result. That is certainly possible in some given markets but it's too broad of a brush. You have to look specifically at a given market where someone has a particular pricing power or not.

HLM: You talk about "large unknowns" around the ACA. Please elaborate.

Steingart: Patient volume is one of those elements. Some hospitals don't know how much a lift they are going to get from that population. Part of it depends upon the mix of the newly insured. Will we have the young invincibles? That is an unknown. The whole idea is that they aren't going to access healthcare services, maybe some preventive care for annual physicals. But even with that, a lot of those folks are just going to pay the premiums but not access the system.

The mix of people on the exchanges is not just a volume unknown it is also a success-of-the-exchanges-themselves unknown. The reality is if you don't get a good mix of people that is actuarially sound in the exchanges, they will break down. Prices will rise because you have sicker people in there and insurance companies raise prices, necessarily, and you drive more people away from the exchanges. That is a big unknown.

In states that have not expanded Medicaid you have the unknown of when and if they will. If you are a hospital in that state and you're getting hit with disproportionate share payment cuts and changes to your uncompensated care mix, then you have uncertainty as to what your overall revenue stream is going to be over the next two years, if you do multiyear planning, which most systems do.­


John Commins is a senior editor with HealthLeaders Media.

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