Many safety-net hospitals in the United States are struggling to keep their heads above water, and a "tsunami of financial challenges" associated with the Patient Protection and Affordable Care Act could result in higher rates of failure and closure, according to a report from consulting firm Alvarez & Marsal.
David Gruber, MD, director of research at Alvarez & Marsal's Healthcare Industry Group and author of the report, said there are several factors that will worsen the financial condition of safety-net hospitals:
• A 45 percent reduction in Medicaid disproportionate share hospital payments between 2014 and 2019.
• A 35 percent to 50 percent reduction in the annual Medicare market basket update through 2019.
• Increased penalties associated with Medicare's value-based purchasing initiatives.
• Potential decrease in volume as previously uninsured patients may get their healthcare at other, non-safety-net hospitals.
"Safety-net hospitals are now operating in the untenable crosshairs of economic distress and healthcare reform," Dr. Gruber said in a release. "Already experiencing the deleterious effects of ongoing reductions in Medicaid spending and fiscal constraints at all government levels, they must now deal with shifting funding streams that historically have supported their missions. The combined result could have a negative impact on socially disadvantaged and clinically vulnerable patients in communities throughout the country."
David Gruber, MD, director of research at Alvarez & Marsal's Healthcare Industry Group and author of the report, said there are several factors that will worsen the financial condition of safety-net hospitals:
• A 45 percent reduction in Medicaid disproportionate share hospital payments between 2014 and 2019.
• A 35 percent to 50 percent reduction in the annual Medicare market basket update through 2019.
• Increased penalties associated with Medicare's value-based purchasing initiatives.
• Potential decrease in volume as previously uninsured patients may get their healthcare at other, non-safety-net hospitals.
"Safety-net hospitals are now operating in the untenable crosshairs of economic distress and healthcare reform," Dr. Gruber said in a release. "Already experiencing the deleterious effects of ongoing reductions in Medicaid spending and fiscal constraints at all government levels, they must now deal with shifting funding streams that historically have supported their missions. The combined result could have a negative impact on socially disadvantaged and clinically vulnerable patients in communities throughout the country."
More Articles on Safety-Net Hospitals:
Florida Safety-Net Hospitals Denounce Medicaid Payment Reform
Moody's: Cuts to Disproportionate Share Payments Will Weigh Heavy on States and Safety-Net Hospitals
Medicaid Expansion Still Leaves Safety-Net Hospitals With Uninsured Immigrants