Moody's foresees modest revenue growth, flat margins over the next 12 to 18 months; Profit margins will stabilize after a significant drop between 2015 and 2016.
The outlook for the for-profit hospital industry remains stable over the near term, with earnings expected to grow in the low-single digits over the next 12 to 18 months, while volume and pricing trends will continue to be modestly positive, Moody's Investors Service says.
"Positive same-facility revenue growth and flat margins drive our stable outlook for the US for-profit hospital sector," Moody's Senior Vice President Jessica Gladstone said in a media release Thursday.
"Aggregate EBITDA will grow between 2.5% and 3.5% over the next year or so. Margins will hold steady as company-specific actions offset multiple industry challenges, including higher wage and benefits expense stemming from nursing shortages and increased physician employment."
Gladstone says many companies' margins will benefit as they integrate acquisitions and divest less-profitable hospitals and other facilities.
Moody's projects patient volumes to increase 1% to 2% over the next 12 to 18 months, with declining unemployment and an aging population among the macro trends that will spur demand for healthcare.
However, structural shifts in payer programs that to reduce utilization and the cost of care by shifting patients to lower-cost settings will offset these positive trends, Moody's says.
Higher private payer rates will be the main driver of revenue growth over Moody's outlook period. Medicare rates for inpatient services will rise, though cuts to laboratory and outpatient reimbursement and reduced Medicaid disproportionate share hospital payments will constrain growth.
Hospitals will continue to employ specialist physicians and make capital improvements for more profitable procedures, contributing to pricing growth.
The total price of a freestanding emergency room visit in Texas averaged $2,199 in 2015 versus $168 for an urgent care clinic visit.
Care delivered at freestanding emergency departments in Texas can cost 10 times as much as the same care delivered at an urgent care center, providing unwary consumers with a hard lesson in retail healthcare when they're handed the bill, research suggests.
The rapid growth of freestanding EDs in Texas has led to sizeable increases in out-of-pocket expenses for consumers, according to research published in the Annals of Emergency Medicine.
"These findings are significant for both patients who find themselves in need of immediate care, as well as for the overall healthcare system," said research co-author Vivian Ho, PhD, chair in health economics at Rice University's Baker Institute for Public Policy and director of the institute's Center for Health and Biosciences.
Ho said patients don't realize the price difference for these two types of facilities until they learn their out-of-pocket expenses. The total price of a freestanding ED visit averaged $2,199 in 2015 versus $168 for an urgent care clinic visit.
In each case, patients were expected to pay one third out of pocket. The average price for similar treatment at hospital-based emergency departments, where patients would have paid 33% out of pocket was $2,259.
"Many patients mistakenly think that freestanding emergency departments and urgent care clinics are similar, because they are often conveniently located in neighborhood shopping centers with modest storefronts," Ho said.
"The sticker shock is alarming. Insurers are being forced to pay higher prices for many healthcare services at freestanding emergency departments that could have been dealt with at much lower cost. These unnecessary medical costs then get passed onto all insurance consumers in terms of higher premiums."
Freestanding EDs Defend Findings
Gillian Schmitz, MD, a San Antonio, TX-based emergency physician who works in both freestanding and hospital-based EDs, said the study's findings validate many claims made by freestanding ED advocates.
"In some senses, this study is very positive for freestandings. We have been continuously told we are more expensive than hospitals and this finally proves what we have been saying for a long time," she said.
"We are actually comparable and even cheaper than hospitals and we've known that for a long time. Freestanding not only offers access to patients but we can do it at a cheaper cost."
Schmitz, a board member of the American College of Emergency Physicians, called "ridiculous" the report's comparison of the services provided at freestanding EDs and urgent care clinics, and the suggestion that patients don't understand the cost difference between the two care venues.
"They are completely different animals and you can't compare apples to oranges," she said.
"All of our freestanding emergency rooms have giant red letters that say 'Emergency Room.' When you walk in everyone says 'Welcome to our Emergency Room. What is your emergency today?' The patients have to sign a form that says they understand they are in an emergency room and that we charge under ER rates, and we probably spend as much time evaluating the patients as we do explaining their explanation of benefits."
Freestanding ED Use on the Rise
The study examined more than 16 million insurance claims processed by BlueCross BlueShield of Texas from 2012 to 2015 to track the growth in use and prices for freestanding emergency departments relative to hospital-based emergency departments and urgent care centers in Texas.
Researchers found that freestanding ED use rose 236% between 2012 and 2015, compared with growth rates of 10% for hospital-based emergency departments and 24% for urgent care clinics. A separate Harvard University study in 2016 identified 360 freestanding EDs operating in 30 states, and more than half of them (181) are located in Texas.
Fifteen of the 20 most common diagnoses at freestanding EDs were also in the top 20 for urgent care clinics. However, prices for patients with the same diagnosis were on average almost 10 times higher at freestanding emergency departments.
The most common diagnostic category treated at freestanding EDs is "other upper-respiratory infections," which has an average price of $1,351, more than eight times the price of $165 that was paid at urgent care clinics.
Thirteen of the most common procedure codes associated with freestanding EDs were also among the 20 most common for urgent care clinics. In cases in which the type of procedure overlapped, the total price per visit was 13 times higher in freestanding EDs. For example, the price for a therapeutic or intravenous injection at a freestanding ED was $203, which was 12 times the $17 price at an urgent care clinic.
Schmitz said the same criticism could be leveled at hospital-based EDs.
"If you reframe the argument, yes 15 of the top 20 diagnoses of freestanding were in the top 20 of urgent care, but that was pretty much the same for hospital-based EDs," she said.
"I work in a hospital ED and all the time I see people come in with urinary tract infections and other things that could be treated in urgent care. Part of it is a matter of education, but the bigger problem is access. Many patients can't get in to see their primary care doctor."
The study said regulatory solutions to address inappropriate use of freestanding EDs could include limiting the amount for which they can balance bill patients for out-of-network care, and requiring that the EDs display the logos of insurance companies with negotiated in-network rates.
The study was funded with a grant from the Texas Medical Center Health Policy Institute, with researchers from Rice, Baylor College of Medicine, the University of Texas Health Science Center at Houston, the Michael E. DeBakey VA Medical Center and BCBSTX.
An economic impact analysis suggests that the Arkansas Trauma System has saved about $186 million, providing a solid return on investment for a program that costs the state $20 million a year.
A study out of Arkansas supports the argument that a well-regulated statewide trauma system is a money-saving investment.
Charles Mabry, MD, an associate professor of surgery at the University of Arkansas for Medical Sciences in Little Rock, was on a team of analysts that compiled an economic impact analysis of the Arkansas Trauma System, which was launched in 2010 using $20 million from a special tax on cigarette sales.
Mabry says his analysis may be the first to evaluate the ROI on a statewide trauma network. Most states have regional networks, and before 2010, Arkansas's trauma network was scattershot, and had no state-designated trauma centers.
The launch of the statewide network in 2010 created a pronounced before-and-after line of demarcation that allowed for comparison.
The analysis, appearing this month in the Journal of the American College of Surgeons, found that over the past five years, the statewide trauma system has reduced preventable deaths by 48%, saved 79 lives in a 12-month period, and saved $186 million, providing taxpayers with a nine-fold return on investment.
The study compared statistics in 2009–the year before the statewide trauma system went on line–with a 12-month period between 2013 and 2014, when the system was up and running.
A Steep Drop in Preventable Deaths
In 2009, the preventable death rate was 30%. That rate dropped to 16% after implementation of the trauma network, a 48% decrease in preventable deaths. The difference equates to 79 lives over 12 months. (For details on the rather extensive methodology, see the report.)
Mabry's team calculated the value of a life using a standard estimate of $100,000 per life-year, with an average lifetime expectancy of 81.5 years, for a lifetime value of $2.36 million per person saved.
The value of a life considers that person's lost earning potential and other costs to society, such as the financial impact on members of a family that may need social services after the death of a breadwinner. Based on that methodology, Mabry calls the savings "a conservative estimate," in part, because most trauma patients are relatively young.
The average age of trauma patients who die is 42. "Most of them have families," he says. "It is a bit of a guessing game, but the younger the patient the more valuable the life saved."
The statewide trauma system links every ambulance under one coordinated emergency medical services network. "The ambulances can describe the patient to the central dispatch area and, while the dispatch can't tell them where to go, they advise them where to go based on their knowledge of the patient and also where the resources are," Mabry says.
"Along with that, we have a statewide electronic, web-based dashboard and each hospital updates us on an hourly basis if it changes, about their capabilities and capacities," he says.
"At our hospital in Pine Bluff, if we have a major trauma and all of our surgeons are tied up, we will let them know. That way if something happens and a patient ordinarily would come to our center, the central dispatch would know to send us to another hospital."
Trauma Standards
Mabry says the hospitals determine if they want to apply to be a trauma center and the state health department conducts an inspection of a hospital to see if they meet certain standards.
"Those standards are generally based on the American College of Surgeons standards for trauma centers, although we did alter them a little bit for our states," Mabry says.
"For instance, for a Level II trauma center for the College of Surgeons standards you have to have a fulltime on-call ophthalmologist, those types of things. In our state we found that wasn't necessary. Plus, we don't have ophthalmologists on staff in most hospitals. They're all outpatient, so we altered it a little bit."
In some states, Florida and Texas in particular, hospitals seek trauma center status to cash in on lucrative trauma activation fees associated with that status, sometimes to the detriment of patients.
Mabry says that isn't a problem in Arkansas.
"We don't have an oversupply of hospital in Arkansas," he says. "We have too many patients and not enough hospitals to begin with, so we don't have a problem with hospitals trying to compete with one another for trauma center status."
If other states are contemplating a statewide trauma network, Mabry says a critical component for success must be a dedicated funding source.
"We are very fortunate that our governors and legislatures have allowed us to have the funding. That $20 million is a lot of money around here, and that has driven a lot of the innovations in the trauma system," Mabry says.
"For instance, the trauma wristband is very helpful. Every time the ambulance picks up a patient, at the first point of contact they have a pre-numbered wristband applied to the patient and that number follows them all the way through the trauma system. If there are problems along the way, we can identify them."
It takes an average of 24 days to schedule a new patient physician appointment in 15 of the largest cities in the nation, up from 18.5 days in 2014.
Despite Boston's dense concentration of physicians, it takes more than twice as long the average national waiting time to schedule a new patient appointment, according to a new survey from physician recruiters Merritt Hawkins.
James S. Gessner, MD, president of the Massachusetts Medical Society, says the Merritt Hawkins findings are consistent with MMS's in-house physician workforce studies.
"We've always had rather long wait times, but we also have universal healthcare with 97% of the citizens in this state covered by health insurance," Gessner says. "I can only expect that it might get a little pronounced at this point."
Gessner says that more medical students are gravitating toward primary care, but that the wait times probably won't decrease anytime soon because there is a "pipeline issue."
"It takes five or six years for those people to appear on the scene," he says. "We are expanding the primary care residencies at a number of our teaching hospitals and that is a very good sign, but we still would have significant shortages in the other specialties with significant waits as well."
Gessner says other more immediate strategies to alleviate wait times include the use of nurse practitioners and physician assistants in a "team-based care" model, and telemedicine.
Boston has a lot of physicians, but many are not clinicians.
"Boston is the Silicon Valley for biotechnology and research. While we have a number of physicians here in Massachusetts and on our rolls in the medical society, there are significant number who have very limited clinical engagement with patients," Gessner says. "They're doing research, or teaching, and there are a large number who are in entrepreneurial businesses and aren't seeing patients at all."
Boston is Not Alone
The survey shows that it takes an average of 24 days to schedule a new patient physician appointment in 15 of the largest cities, up from 18.5 days in 2014, 20.5 days in 2009 and 21 days in 2004, the previous years that Dallas-based Merritt Hawkins conducted the survey.
"Physician appointment wait times are the longest they have been since we began conducting the survey," said Mark Smith, president of Merritt Hawkins. "Growing physician appointment wait times are a significant indicator that the nation is experiencing a shortage of physicians."
Dallas has the shortest average physician appointment wait times of the 15 metro markets at 15 days. Average physician appointment wait times in other cities tracked by the survey include:
37 days in Philadelphia
28 days in Portland
28 days in Seattle
27 days in Denver
24 days in Los Angeles
Wait times are even longer outside of major metro areas, where the physician-to-population ratio generally is not as high as in major markets. For the first time, the survey this year examined new patient wait times in 15 mid-sized cities of approximately 90,000 to 140,000 people and found the average is 32 days, which is 33% longer than in the major metro markets.
Yakima, Washington has the longest average physician appointment wait times of the 15 mid-sized cities at 49 days while Billings, Montana has the shortest at 11 days.
"Finding a physician who can see you today, or three weeks from today, can be a challenge, even in large urban areas where there is a relatively robust supply of doctors," said Smith. "The challenge becomes even more difficult in smaller communities that have fewer physicians per population."
Medicare/Medicaid Acceptance Rates
The survey found that the average rate of physician Medicare acceptance is 85% in the 15 large metro markets and 81% in the 15 mid-sized markets. The average rate of physician Medicaid acceptance is 53% in the large metro markets and 60% in the mid-sized markets.
Smith said the survey shows that physician supply and accessibility will need to be enhanced as the healthcare system continues to evolve.
"More physicians will need to be trained, access to other types of providers expanded, and emerging technologies employed to ensure that health care delayed does not become health care denied," Smith said.
AAMC Projects Physician Shortfall
The survey findings fall in line with a report issued this month by the Association of American Medical Colleges, which shows a projected shortage of between 40,800 and 104,900 doctors by 2030.
"The nation continues to face a significant physician shortage. As our patient population continues to grow and age, we must begin to train more doctors if we wish to meet the health care needs of all Americans," AAMC President and CEO Darrell G. Kirch, MD, said in remarks accompanying the report.
By 2030, the study estimates a shortfall of between 7,300 and 43,100 primary care physicians. Non-primary care specialties are expected to experience a shortfall of between 33,500 and 61,800 physicians.
"By 2030, the U.S. population of Americans aged 65 and older will grow by 55 percent, which makes the projected shortage especially troubling," Kirch said. "As patients get older, they need two to three times as many services, mostly in specialty care, which is where the shortages are particularly severe."
Gessner says some effort should be made to find attractive career pathways for physicians who aren't now actively practicing medicine.
"Perhaps part-time practice is an option for people who want to restrict their practice while they're raising a family or for other social considerations that we need to discuss, think about and accommodate," he says.
"There are a lot of different reasons for these wait times, but there are also a large number of potential solutions; some off of technology and some off of work/lifestyle changes. We always need to engage more people in the profession."
The bond rating agency says the Republican plan to repeal and replace the Patient Protection and Affordable Care Act would hurt drug and medical device makers and increase bad debt burdens at for-profit hospitals.
Criticism of the American Health Care Act is coming from all directions.
The nation's largest healthcare provider and patient advocacy associations, including the American Hospital Association, the American Medical Association, and AARP, denounced the plan to repeal and replace the Affordable Care Act hours after it was made public.
And that was before the nonpartisan Congressional Budget Office said AHCA would increase the nation's uninsured population by 24 million within the decade, and slash Medicaid funding by $880 billion.
Now, Moody's Investors Service says AHCA in its current form would be a credit negative for most for-profit healthcare companies.
"The proposed changes to the individual insurance market would be modestly credit negative for healthcare companies over the next year or so, as some people choose to forgo health insurance," Moody's Senior Vice President Jessica Gladstone said in ratings brief.
"But from 2020, the proposed law, if enacted, would be increasingly credit negative because healthcare coverage would become less affordable for more people, particularly older Americans, resulting in a larger uninsured population and a greater reduction in demand."
Moody's says there are provisions in the AHCA that would soften the immediate impact of the cuts, such as increased funding for hospitals in Medicaid non-expansion states, and additional funding for safety net hospitals to offset the costs of caring for the uninsured.
Forecast: Depressed Sales, Weaker Payer Mix
However, by 2020 the $880 billion in cuts to Medicaid would begin to take effect and the growing uninsured population, unable to afford care, would depress sales for drug and medical device makers, and would expose for-profit hospitals to higher levels of bad debt.
The AHCA's repeal of the medical device and prescription drug taxes in 2018 would provide about $4.7 billion in relief annually for the two industries, but Moody's says those benefits would be offset by the negative effects of the declining insured patients and Medicaid funding.
The Republican plan also doesn't address the ACA's reductions in hospitals' annual reimbursement updates from Medicare, which will cost hospitals about $300 billion in revenue from 2018 to 2026.
If those reductions remain in place, hospital margins would tighten as they absorb more bad debt expense from more uninsured people under the AHCA, and inflationary pressures without an offsetting increase in Medicare rates, Moody's said.
Last week, Moody's and S&P Global Ratings issued research briefs warning that the AHCA's Medicaid reductions would strain operating revenues in both the for-profit and not-for-profit hospital sectors.
"The overall payer mix for providers would weaken as the number of people without insurance would most likely rise as would the hospital sector's level of bad debt and charity care expenses," S&P said.
"Under the proposed bill, minimum insurance requirements will be diluted, and coupled with the elimination of the mandate to buy coverage, we believe preventive care may decrease, leading to higher costs over the longer term. In additional the further growth in high-deductible plans that is likely, combined with greater levels of uninsured people, could result in higher health care costs to consumers."
It is estimated that the Republican plan to repeal and replace the Affordable Care Act would reduce federal Medicaid spending by $880 billion over the next 10 years. That would have a devastating effect, particularly in rural America.
As many as 24 million Americans could lose their health insurance over the next decade if the American Health Care Act is enacted. That's according to the nonpartisan Congressional Budget Office's staggering assessment of the Republican plan to repeal and replace the Affordable Care Act.
The CBO says most of that savings would come from reductions in federal Medicaid spending, which would amount to $880 billion over the 10-year span, in part because of a shift to a per-capita, capped entitlement. That estimate does not include the billions of dollars in state Medicaid matching funds cuts that are likely when the federal dollars disappear.
It has been widely reported that the AHCA's ill-effects would be felt mostly by older, rural Americans (ironically, a key demographic for President Donald Trump.) We can well imagine what will happen to the quality of life for millions of Americans who may find themselves without healthcare coverage if the ACA's Medicaid expansion is repealed and alternative coverage becomes unaffordable.
Beyond that debacle, imagine how a $880 billion funding loss in the public healthcare safety net is going to be absorbed by thousands of hospitals across the United States, many of which are already under financial duress.
The demand for healthcare services doesn't evaporate when the funding dries up. These tens of millions of newly uninsured people will access care through the emergency department, just as they did before Obamacare.
Unintended Consequences
As bad debt and uncompensated care soar, how many of these hospitals will shutter, and what will the impact of those closures mean, not just on care access, but on the economic vitality of the communities these hospitals serve?
This is a major unintended consequence that American Health Care Act fails to acknowledge. Medicaid is not just a healthcare program.
It is also one of the largest infrastructure and economic development programs that the federal government has ever devised. Instead of building roads, railroad tracks, bridges and dams, Medicaid provides a vital funding stream (however paltry the reimbursement) that keeps the doors open at many hospitals in rural America.
Community Impact
Community and critical access hospitals are economic engines for the communities they serve. They are often one of the largest employers in town, and the dollars that fund those relatively steady, well-paying hospital and ancillary jobs churn through the local grocery store, the car dealership, the restaurants, the hair salon, and the furniture store, and boost local sales and property taxes.
Beyond that, a healthy hospital is a critical component in every community's business recruiting portfolio. When the local hospital closes the doctors leave, the local healthcare infrastructure withers, and prospects for attracting industry dwindle. Why would any industry locate to a town that's incapable of supporting something as fundamental and vital to community life as a hospital?
It's also possible that the CBO estimates are too rosy, because their focus is the effect on the federal budget. If federal Medicaid dollars go away, states very likely will not increase their funding match to account for the difference.
Plight of the Poor and Sick
More likely, if Medicaid is transformed into a per-capita, capped program under the ACHA, there may not be sufficient federal oversight or leverage to ensure that states maintain adequate funding levels.
As in Congress, the poor and sick don't carry much weight in state capitols.
It is no small irony that the nearly $1 trillion in proposed cuts to Medicaid mandated by the AHCA came just one week after President Trump unveiled a $1 trillion infrastructure plan that was embraced as a job-creating stimulus plan by most pols and pundits.
The nation's transportation grid needs a significant investment. Cannot the same argument be made for the nation's healthcare delivery grid, a job-creating economic engine that powers rural America?
We should debate whether the United States should continue to spend close to 20% of its gross domestic product on healthcare. There is plenty of waste in the nation's healthcare delivery system, and every dollar that is spent on healthcare is a dollar that is not spent on other vital areas, such as education.
Argue the case, but acknowledge the risk when healthcare funding is slashed.
Electronic medical records systems can provide clinicians with reams of patient information, but the management of EHR data leads the list of concerns raised by healthcare provider organizations.
Lorraine B. Possanza, program director for ECRI's Partnership for Health IT Patient Safety, says the troves of patient information now available have created a new set of challenges for providers.
"The object is still for people to have the information that they need to make the best clinical decision," Possanza said in a statement released by ECRI. "Health information needs to be clear, accurate, up-to-date, readily available, and easily accessible."
Implementation and Use of Clinical Decision Support
Test Result Reporting and Follow-Up
Antimicrobial Stewardship
Patient Identification
Opioid Administration and Monitoring in Acute Care
Behavioral Health Issues in Non-Behavioral-Health Settings
Management of New Oral Anticoagulants
Inadequate Organization Systems or Processes to Improve Safety and Quality
ECRI uses its Patient Safety Organization event data to compile the list, which is based on concerns raised by healthcare provider organizations.
"The 10 patient safety concerns listed in our report are very real," says Catherine Pusey, RN, associate director, ECRI Institute PSO. "They are causing harm—often serious harm—to real people."
No. 2 on the list, unrecognized patient deterioration, remains a top concern, despite improved clinical protocols, training and education for providers, and public awareness campaigns that have enabled speedier recognition of, and response to, stroke and ST-elevation myocardial infarction.
"People have seen how well the campaigns have worked for stroke and STEMI and how much they've improved outcomes," says Patricia N. Neumann, RN, senior patient safety analyst and consultant, ECRI Institute.
"What if those same principles could be applied to other conditions that require fast recognition and management? We could have a big impact on improving outcomes."
No. 3 on the list, implementation and use of clinical decision support systems, encompasses "tools that we use to ensure that the right information is presented at the right time within the workflow," says Robert C. Giannini, and ECRI patient safety analyst and consultant. If implementation or use is suboptimal, however, opportunities for CDS to aid decision-making may be missed, care could suffer, and patient harm could result.
The list and guidance are designed to help providers identify priorities and create corrective action plans. ECRI Institute says provider organizations should adapt relevant patient safety interventions to meet each care setting.
Bond raters believe the American Health Care Act's funding changes for Medicaid, combined with the removal of the individual mandate and other changes to insurance markets, would reduce healthcare spending for the federal government and reduce revenues for hospitals.
A House proposal that would shift Medicaid from an open-ended to a per-capita entitlement program would reduce federal spending on healthcare, but harm hospitals' margins, the bond rating agencies believe.
"Operating revenues and margins for for-profit and not-for-profit hospitals are likely to be pressured by the passage of the legislation as proposed," S&P Global Ratings said in a research brief issued Wednesday.
"The overall payer mix for providers would weaken as the number of people without insurance would most likely rise as would the hospital sector's level of bad debt and charity care expenses," S&P said.
"Under the proposed bill, minimum insurance requirements will be diluted, and coupled with the elimination of the mandate to buy coverage, we believe preventive care may decrease leading to higher costs over the longer term. In additional the further growth in high-deductible plans that is likely, combined with greater levels of uninsured people, could result in higher health care costs to consumers."
S&P says that the not-for-profit health care sector is stable but already faces operating pressures because of weaker reimbursement growth owing to the movement to value-based reimbursements and rising labor costs.
"The passage of this legislation as proposed would in our view add to the stress in the sector and could lead to a negative outlook over time, especially for safety net providers which are especially vulnerable to Medicaid reductions," S&P says.
Those concerns were mostly echoed by Moody's Investors Service in its analysis.
"Importantly, the legislation does not repeal Medicaid expansion; states would be allowed to maintain expanded Medicaid eligibility, but they would bear a greater share of the costs starting in 2020," Moody's says.
"We expect that federal payments will grow more slowly than Medicaid program costs, forcing states to make changes that would likely be credit negative for hospitals, including lowering payments to hospitals and other providers, reducing coverage or benefits and reducing targeted payments to safety-net hospitals."
Credit-negative for Hospitals
Moody's says changes in the federal allocation of subsidies in the individual insurance markets would be a credit negative for hospitals.
"We believe that the effect of older enrollees losing coverage will outweigh the positive effect of younger people gaining coverage given that older people have greater healthcare needs and as they lose coverage, hospitals would incur greater uncompensated care and bad-debt costs," Moody's says.
Ending the individual mandate won't be calamitous for hospitals because most gains in insurance coverage under the ACA came through the expansion of Medicaid, Moody's says.
"Repealing the individual mandate would be credit negative for hospitals because some individuals would drop insurance coverage if they no longer face a financial penalty for not purchasing insurance," Moody's says.
"However, the credit effect on hospitals is not material given that the current financial penalties for not purchasing insurance are too small to compel many young and relatively healthy people to buy insurance."
The American Hospital Association was one of the first in a growing number of major healthcare lobbies to pan the House GOP less than one day after the bill was made public.
"We believe that any changes to the Affordable Care Act must be guided by ensuring that we continue to provide healthcare coverage for the tens of millions of Americans who have benefitted from the law," AHA President and CEO Richard J. Pollack said in a letter to Congress.
"We believe the legislation needs to be reviewed through this lens, and carefully evaluated regarding its impact on both individuals and the ability of hospitals and health systems which are the backbone of the nation's healthcare safety net in terms of our ability to care for all of those who walk through our doors."
America's Essential Hospitals offered conditional praise for some parts of the AHCA, particularly the repeal of cuts to disproportionate share payments for safety net hospitals. However, concerns about the negative effects of the reformed funding mechanisms for Medicaid and other changes to the individual coverage market outweighed the benefits.
AMA Opposes GOP Plan
In a letter Wednesday to House leaders, Essential Hospitals CEO and President Bruce Siegel, MD, urged them to withdraw the AHCA until the Congressional Budget Office can provide a nonpartisan estimate of costs and coverage implications.
The American Medical Association has also made clear its opposition to the House plan.
"While we agree that there are problems with the ACA that must be addressed, we cannot support the AHCA as drafted because of the expected decline in health insurance coverage and the potential harm it would cause to vulnerable patient populations," AMA CEO James L. Madara, MD, said in a letter to House leaders.
An initial review shows that the American Health Care Act does little to address healthcare access woes in rural America.
House Republicans this week made public their replacement plan for the Affordable Care Act. The so-called American Health Care Act does not have much support beyond House leadership, but before it collapses under relentless blowback from all corners, let's look at what it might have done for rural health.
Maggie Elehwany, government affairs and policy vice president at the nonpartisan National Rural Health Association, is still sifting through the fine print, but she offered a few thoughts after an initial reading of the proposed law.
"Our concern is that it does nothing to address basic access issues," she says.
"We're in the midst of a rural hospital closure crisis, where at the current rate of closure we are going to lose 25% of all rural hospitals in this country in less than a decade if Congress doesn't act. One in three rural hospitals is currently at financial risk and is vulnerable to closure. That is what we need to see in any healthcare reform bill."
"Because this bill specifically reformats Medicaid, we would have liked to have seen them address Medicaid equity for rural providers," Elehwany says.
"We have concerns over the phasing out of the FMAP and introducing the per capita cap. We strongly support the federal government's maintaining its moral obligation to ensure that Medicaid funding goes to needed populations. Rural America is disproportionately dependent upon Medicaid. They are poorer, they are sicker, they are per capita older."
To be clear, the plight of rural hospitals predates the American Health Care Act, but states that refused to expand Medicaid under the ACA didn't do their rural hospitals any favors either. Elehwany says non-expansion states are still contending with high percentages of uninsured citizens.
"If you are a rural state, more likely than not you didn't expand Medicaid, but they are still showing up in hospitals sick and these small, rural hospitals are subsidizing care," she says.
"Additionally, in the exchanges we saw that rural Americans were mostly buying bronze plans, maybe not realizing how high the deductible was, but they couldn't afford their insurance. So, they're still showing up in the emergency room, still getting sick, not being able to be treated. Those bad debt cuts are really harming rural providers. We would like to see that addressed."
Improving access to healthcare in rural America isn't simply a matter of expanding health insurance, which remains a valid criticism of the ACA.
"Just because you have an insurance card doesn't mean you can access care," Elehwany says.
"And like we saw the high-deductible plans on the federal exchanges, it didn't mean you could actually afford your healthcare coverage. It didn't mean that, with the workforce shortages that are plaguing rural America, you could find a doctor in your rural community."
A Matter of Access
"Twenty percent of the U.S. population lives in a rural community, but only 9% of physicians practice there. It doesn't mean that you can access care if you live in a community where your rural hospital has closed, and now you have to drive 50 miles to the nearest emergency room," she says.
"It doesn't mean that you can access care if the plan you purchased has a narrow network created by the insurance company and you can't go to your local provider."
NRHA also has concerns about the per capita Medicaid funding scheme proposed in the House bill.
"We don't have a specific policy on a per capita cap, which looks like the movement in the House bill. We're trying to develop that rapidly and probably will have concerns that the federal government shouldn't abdicate oversight authority to ensure that federal tax dollars go to the neediest populations," Elehwany says.
"You can certainly have local and state control. We just don't want to see the federal government abdicate all its authority."
Elehwany found some positives for rural health in the House bill.
"It does look like there is safety net funding; $10 billion over five years. We strongly hope that that money is going to be targeted to help the safety net of rural America," she says.
"The bill summary says non-expansion states would receive an increased matching rate of 100% for calendar years 2018 through 2021, and then it would be reduced to 95%. So, it looks like they are trying to help states that haven't expanded Medicaid, which is a good thing."
"Is that going to do enough? We're concerned about that. We would love to see them allow safety net providers to have cost-based reimbursement in Medicaid similar to how they have cost-based reimbursement in Medicare, and have that enhancement come through the federal funding."
Let's Be Blunt
The ink is still wet on this bill, but it is DOA, even before the Congressional Budget Office has scored it. Democrats are unified in opposition, as are powerful lobbies, including the American Hospital Association, which has influential members in every Congressional district.
Republicans have majorities in the House and Senate, but intraparty support is already splintering and it's not going to coalesce in the coming weeks as the costs and other unsavory details emerge, even as leadership fast-tracks the bill.
For moderate Republicans, the bill goes too far. For conservatives, it doesn't go far enough. So far, President Trump has offered only tepid support.
However slim its chances, the American Health Care Act remains the most aggressive attempt to fundamentally revise Medicaid since its creation in 1965, so it bears watching.
The study finds gains in quality of hospital care and slower cost growth over five years, which analysts say may be a harbinger of future trends as more hospitals shift from fee-for-service payment models.
Truven Health Analytics has named its 100 Top U.S. hospitals for 2017.
The annual five-year trend analysis is based on overall organizational performance between 2011 and 2015, and uses markers such as inpatient mortality and complication rates, 30-day readmissions, and lengths of stay.
The analysis also found that cost growth was flat for most of the hospitals.
"The hospital industry's ongoing transition from fee-for-service to value-based care appears to be bearing some positive results for both patients and payers," Jean Chenoweth, senior vice president at Truven Health Analytics, said in remarks accompanying the list.
"The magnitude of improvement we've observed over the last five years is greater than any other five-year period we've tracked," she said.
"On top of that, this year's winners have reached new highs in performance in comparison to peers across the country, which suggests that improvement in value from hospitals is likely to continue."
Nationwide Benchmarks
The 100 Top Hospitals study calculates five-year changes in performance on an annual basis. This directional performance data provides a granular look at where U.S. hospitals are showing the most significant improvement, and where performance has plateaued or declined.
Some of the most noteworthy trends in overall hospital performance include:
Improved 30-Day Readmission Rates: One of the most closely watched quality metrics, 30-day readmission rates, has shown improvement in 52% of hospitals over the past five years. That rate has stayed flat in 48% of hospitals and worsened in .1% of hospitals.
Improved Mortality Index: The risk-adjusted mortality showed improvement in 21% of hospitals, remained steady in 79% of hospitals, while only 0.1% of hospitals saw an increase in mortality.
Shorter Average Length of Stay: The severity-adjusted average length of stay improved in 18% of hospitals over the same time period. That rate held steady in 76% of hospitals and worsened in 6% of hospitals.
Flat Inpatient Expenses: The average cost of treating an inpatient over five-years improved in 2% of hospitals, held flat in 79% of hospitals, and worsened in 19% of hospitals.
Top 100 Benchmarks Exceed Peers
The 100 Top Hospitals winners' performance and improvement was markedly better than that of peers, including mortality index rates that were 23% better and complications index rates that were 17% better.
This was achieved while incurring inpatient expenses that were 9% lower.
Truven estimates that if all Medicare inpatients received the same level of care as those treated in its 100 Top Hospitals:
Nearly than 89,000 additional lives could be saved;
Over 61,000 additional patients could be complication free;
Over $5.6 billion in inpatient costs could be saved;
The average patient stay would decrease by half a day;
Over 300,000 fewer discharged patients would be readmitted within 30 days;
Patients would spend nine minutes less in hospital emergency departments per visit.
Truven, a subsidiary of IBM Watson Health, evaluates clinical and operational performance in 11 areas: inpatient mortality; 30-day mortality rate; complications; core measures; 30-day risk-adjusted readmission rate; severity-adjusted average length of stay; mean emergency room throughput; inpatient expense per discharge; Medicare spend per beneficiary; adjusted operating profit margin; and Hospital Consumer Assessment of Healthcare Providers and Systems score. The study has been conducted annually since 1993.
Major Teaching Hospitals
Advocate Lutheran General Hospital – Park Ridge, IL
Baptist Medical Center Jacksonville – Jacksonville, FL
Beaumont Hospital - Royal Oak – Royal Oak, MI
Emory University Hospital – Atlanta, GA
Houston Methodist Hospital – Houston, TX
NorthShore University HealthSystem – Evanston, IL
Northwestern Memorial Hospital – Chicago, IL
Ochsner Medical Center – New Orleans, LA
OhioHealth Doctors Hospital – Columbus, OH
Providence - Providence Park Hospital – Southfield, MI
SSM Health St. Mary's Hospital – St. Louis, MO
St. Joseph Mercy Hospital – Ann Arbor, MI
St. Luke's University Hospital - Bethlehem – Bethlehem, PA
University of Colorado Hospital – Aurora, CO
University of Utah Health Care – Salt Lake City, UT
Teaching Hospitals
Adventist Medical Center Hinsdale – Hinsdale, IL
Aspirus Wausau Hospital – Wausau, WI
Beaumont Hospital - Grosse Pointe – Grosse Pointe, MI
Bethesda North Hospital – Cincinnati, OH
Billings Clinic Hospital – Billings, MT
BSA Health System – Amarillo, TX
Franciscan Health Indianapolis – Indianapolis, IN
IU Health Ball Memorial Hospital – Muncie, IN
Kendall Regional Medical Center – Miami, FL
Lancaster General Hospital – Lancaster, PA
LDS Hospital – Salt Lake City, UT
Mercy Health Saint Mary's – Grand Rapids, MI
Mercy Hospital St. Louis – St. Louis, MO
Newton-Wellesley Hospital – Newton, MA
Park Nicollet Methodist Hospital – St. Louis Park, MN
Parkview Regional Medical Center – Fort Wayne, IN
Poudre Valley Hospital – Fort Collins, CO
Riverside Medical Center – Kankakee, IL
Rose Medical Center – Denver, CO
Sentara Leigh Hospital – Norfolk, VA
St. Cloud Hospital – St. Cloud, MN
St. Luke's Boise Medical Center – Boise, ID
St. Mary's Hospital – Madison, WI
St. Vincent Healthcare – Billings, MT
The Christ Hospital Health Network – Cincinnati, OH
Large Community Hospitals
Advocate Condell Medical Center – Libertyville, IL
Asante Rogue Regional Medical Center – Medford, OR
Chandler Regional Medical Center – Chandler, AZ
Chester County Hospital – West Chester, PA
CHRISTUS Mother Frances Hospital Tyler – Tyler, TX
EvergreenHealth Kirkland – Kirkland, WA
FirstHealth Moore Regional Hospital – Pinehurst, NC
Florida Hospital Memorial Medical Center – Daytona Beach, FL
Henrico Doctors' Hospital – Richmond, VA
Logan Regional Hospital – Logan, UT
Memorial Hermann Memorial City Medical Center – Houston, TX
Mercy Hospital – Coon Rapids, MN
Mosaic Life Care – Saint Joseph, MO
North Florida Regional Medical Center – Gainesville, FL
Roper Hospital – Charleston, SC
Scripps Memorial Hospital La Jolla – La Jolla, CA
St. David's Medical Center – Austin, TX
St. Francis Downtown – Greenville, SC
WellStar West Georgia Medical Center – LaGrange, GA
West Florida Hospital – Pensacola, FL
Medium Community Hospitals
American Fork Hospital – American Fork, UT
Baptist Medical Center Beaches – Jacksonville Beach, FL
Baylor Scott & White Healthcare - Round Rock – Round Rock, TX
Blanchard Valley Hospital – Findlay, OH
Bon Secours St. Francis Hospital – Charleston, SC
Chino Valley Medical Center – Chino, CA
Clermont Hospital – Batavia, OH
Dupont Hospital – Fort Wayne, IN
Fairview Park Hospital – Dublin, GA
Holland Hospital – Holland, MI
Inova Fair Oaks Hospital – Fairfax, VA
Medical Center of the Rockies – Loveland, CO
Mercy Medical Center – Cedar Rapids, IA
Ochsner Medical Center - Baton Rouge – Baton Rouge, LA
Saint Alphonsus Medical Center - Nampa – Nampa, ID
Sherman Oaks Hospital – Sherman Oaks, CA
St. Vincent Carmel Hospital – Carmel, IN
Sycamore Medical Center – Miamisburg, OH
Texas Health Harris Methodist Hospital Southwest Fort Worth – Fort Worth, TX
West Valley Medical Center – Caldwell, ID
Small Community Hospitals
Alta View Hospital – Sandy, UT
Aurora Medical Center – Two Rivers, WI
Aurora Medical Center – Oshkosh, WI
Fairview Northland Medical Center – Princeton, MN
Franklin Woods Community Hospital – Johnson City, TN
Hawkins County Memorial Hospital – Rogersville, TN
Henry Community Health – New Castle, IN
Lakeview Hospital – Bountiful, UT
Lakeview Hospital – Stillwater, MN
Lakeview Medical Center – Rice Lake, WI
Oaklawn Hospital – Marshall, MI
OSF Saint James - John W. Albrecht Medical Center – Pontiac, IL
Parkview Huntington Hospital – Huntington, IN
Spectrum Health United Hospital – Greenville, MI
Spectrum Health Zeeland Community Hospital – Zeeland, MI
St. John Owasso Hospital – Owasso, OK
St. Joseph Mercy Livingston Hospital – Howell, MI
Texas Health Harris Methodist Hospital Alliance – Fort Worth, TX
Waynesboro Hospital – Waynesboro, PA
Yampa Valley Medical Center – Steamboat Springs, CO
