Healthcare Reform: The Ultramarathon

by Todd Karpinski, ICHP President
July 16, 2010

The road to implementing a transformation in health care will be extremely long and difficult. We will encounter numerous ups and downs, sharp curves, and turbulent times before it is all said and done. While I can’t predict how our ‘health care legs’ will feel after such a long race, I thought I would provide an update on how the reform is looking at the one mile mark.

There are many forces that will continue to challenge the business fundamentals of health care providers. These include capital constraints, reduction in payments, covering the uninsured, patient safety and quality. The new reality for health care systems will be a higher cost of capital, disproportionate pressures on smaller sized facilities and an eventual consolidation of providers. Focus will continue to be placed on patient centered care as patient satisfaction scores will begin to drive reimbursement rates.

In the midst of these challenges, health care reform is upon us in some form, yet the full impact is still far away into the horizon. Health care reform will be built around four overriding principals: affordability, coverage for all Americans, portability, and long-term fiscal sustainability. Competing forces will be on opposite sides of these principals, all vying for limited health care resources. On March 21st, 2010 the first piece of health reform law was enacted, entitled the “Patient Protection and Affordable Care Act”. This act will provide comprehensive health care coverage to over 32 million Americans. The expansion of coverage to the uninsured will be funded through a series of new taxes and changes/cuts in existing Medicare and Medicaid. While the majority of the new taxes are almost immediate, many of the new laws and rules regarding the expansion of coverage do not take place for up to four years.

The largest immediate impact of the law was the closing of the costly hole in coverage (i.e., “the donut hole”) contained in the Medicare prescription drug program for seniors. Many seniors will receive rebate checks in the very near future. Starting in six months, insurance companies will no longer be allowed to deny or drop coverage if an individual becomes sick, there will be no lifetime cap on benefits, and children can no longer be denied coverage based on preexisting conditions. In four years, insurance coverage cannot be denied to adults for a preexisting condition.

So the $63,000 questions are: ‘How will the reform affect my hospital?’ and ‘Who are the winners and losers with this reform?’ From a hospital industry perspective, health care reform will help stabilize the future. When fully implemented and coverage is expanded, hospitals will have significantly less bad debt and charity care. There is also speculation that because Americans will have stable coverage, more preventative care will be sought, thereby lowering hospital costs and saving lives. Questions still remain as to whether or not hospitals will continue to receive the type of annual increases in Medicare payments as experienced in the past or whether there will be a dramatic reduction in reimbursement in the years to come.

With any new piece of legislation there are bound to be some winners and losers. The almost certain winners in health care reform will be:
  • Primary care physicians – increases in reimbursement
  • Health information technology – EMR is part of the package
  • Measurement of best practice companies (consultants)
Probable winners include:
  • Allied health professionals may be able to expand scope of practice
  • Rural health care – expanding access
  • Medical education – more loan forgiveness
Unknown at this point:
  • Medical attorneys Testing laboratories – declines in clinically irrelevant testing
  • General acute care hospitals – more patients will get care, however may see a change in utilization
  • Academic medicine – funding for research may increase, but payment for expensive technologies will decrease
Possible losers:
  • Health plans – lower costs, increased regulation
  • Specialty physicians – fees may be cut
  • 340b drug pricing – may be a thing of the past with full health care coverage
  • Pharmaceutical industry – price cuts
While it is next to impossible to predict the ramifications of the new health care bill, I hope this brief overview provides you with insight on what has been put into place and what is to come. As we all know and likely preach to others, change is inevitable and must be embraced. So, whether good or bad, the changes from health care reform are upon us, and it is our duty to ensure our patients continue to receive high quality care as we proceed through this journey.

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