How will Obamacare affect you?
Local hospital CEOs weigh in
The Affordable Care Act (ACA), also known as Obamacare, is nothing if not complicated. Although the law was passed in 2010, the major provisions of the ACA are required as of January 1, 2014. This not only affects individuals, who must now have insurance or pay a fine, but also healthcare providers and hospitals.
To start, there is confusion over how long the actual law is. Reports on the length of the law range from 1,000-7,000 pages, with an additional 11,000-60,000 pages of rules and regulations. If you calculate the actual number of words in the law, it is longer than the King James Bible. Gary Myers, CEO of Mammoth Hospital said the bill is so long that, “we don’t even know what we don’t know yet.”
But there are a few changes that are known. In general, hospitals across the United States will have increased administration costs, smaller reimbursements, and ultimately less business. “The intent of the ACA is to avoid as much hospitalization and hospital care as possible,” said John Halfen, CEO of Northern Inyo Hospital (NIH) in Bishop.
“It’s really just less money to do more,” said Halfen. “There is a ton, and I mean a lot, of additional administrative functions that have to happen and none of them are funded at all.” These include patient engagement functions such as helping people sign up for health insurance, keep doctors appointments and take their medication. It also includes data collection and reporting to the federal government, who will use the information to continually update protocols in hopes of improving the system. “We’ve spent a great deal of time, effort, and energy as an organization learning, meeting, teaching, training, communicating, and organizing … And we’ll continue to do so for at least the next couple of years,” Myers said.
In addition, the ACA moves the entire healthcare system from a fee-for-service system to a “managed care” or “value” system. In an effort to improve the quality of care provided, healthcare providers will no longer be reimbursed for the individual services they provide. Rather, they will be given a lump sum reimbursement for each patient and expected to manage the health of that patient.
“Under the value system, we won’t be compensated for giving ‘lots of care,’ only for giving ‘the right care,’” Myers said.
“Our responsibilities now go beyond providing care. It’s a whole block of social service types of things,” said Halfen. “We really didn’t have any responsibility for when a patient went home to make sure they had food in the refrigerator.”
Halfen admitted this was perhaps an exaggerated expectation. But, “if these patients are undernourished, they’re not going to get better. If we only get paid for one emergency room visit, for example, but there’s actually three or four because the patient isn’t getting better because there is not food in the refrigerator, it’s going to end up being our problem.”
A less extreme example would be the extra cost to the hospital for follow-up phone and house calls to make sure patients are taking their medications.
As of 2012, 48 million Americans were uninsured. The ACA hasn’t improved this, according to Halfen.
“The bottom line right now, today, is that there are more uninsured people than before,” he said. “And the folks that do have insurance, it really isn’t good. I have a phone call almost everyday but at least two or three a week from people who now have these humungous deductibles. They’re looking to the hospital to provide service for nothing. To the hospital, that’s not insured care.”
Both NIH and Mammoth Hospital are considered rural health care providers and critical access hospitals. This has allowed them to write off huge administrative costs since they have a lower volume of patients compared to hospitals in more populated areas.
“We had a different reimbursement mechanism from CMS [Centers for Medicare Services] for Medicare services,” Halfen said. “That hasn’t gone away yet so far in 2014, but it will probably go away fairly soon, by 2015. Medicaid is already reduced by about 20% in California. Everything is going to get reduced, and it’s going to get reduced from almost nothing to even less.”
Mammoth Hospital has joined nine other hospitals as part of the National Rural Accountable Care Organization, which attempts to actively manage high-risk Medicare patients in order to minimize costs. “If this is successful, we have the opportunity to share in the savings that the Medicare program will appreciate as long as the quality of care and patient satisfaction are high,” Myers said.
Even with all these changes, neither Halfen nor Myers foresee employee layoffs or a reduction in hospital employees’ insurance benefits.
“Hospitals aren’t buildings,” Halfen said. “Hospitals are the people giving care in the building. They’re 65% of our costs so we have to be aware of it. But they have to be there. We’re doing our best to make sure the employees are taken care of.”
The survival of small hospitals like NIH and Mammoth could be at stake as a result of these changes.
Around the country, hospitals are closing down or merging with nearby hospitals to cut costs. When asked about the survival of NIH, Halfen said, “We don’t have to run faster than the bear. We just gotta run faster than most of the hospitals. Because as soon as those get eaten up, people are going to say: ‘Time out. This isn’t working. We’ve got to have the rural hospitals. They’re our basic safety net so we’ve got to do something else.’”
Myers admitted that “the law is a significant threat to the rural safety net in our country. The challenge to us in the next three years is to continue to deliver very high quality care, cut our cost by 20-30%, build patient loyalty through personalized care that delivers high value, grow our surgical and procedural business, and evolve to a leaner, more efficient organization,” he said.
“It’s not that these are bad ideas,” Halfen concluded. “Its just that all the ends don’t come together. Somebody should be helping these folks out, but who is it? And where does the money come from?”
