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6 Revenue Pressures Create Negative Outlook for NFP Hospitals

Rene Letourneau, for HealthLeaders Media, June 30, 2014

6. State budget concerns

States that have chosen to expand Medicaid are going to feel the pressure of what Arrick calls the "woodwork effect" of people who would have qualified for Medicaid before the expansion of eligibility guidelines.

"A lot of folks who would otherwise have qualified for Medicaid are showing up, and the feds are not paying for them at 100%. The feds are covering them at traditional rates," he says. "All of these folks are coming out of the woodwork now because of the focus on healthcare coverage."

The problem for hospitals, Arrick says, is that having Medicaid coverage will encourage people to access services, which puts collections in jeopardy if a state has to make budget cuts.

"As we all know, when the economy takes a downturn, one of the first places states look to cut is Medicaid."

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