Affordable Care Act creates “economic chaos” for hospitals and providers
CHICAGO--Although the Patient Protection and Affordable Care Act (ACA) has led to millions of more people gaining health insurance coverage, the legislation has created “economic chaos” for hospitals and providers, according to Nathan Kaufman, managing director at Kaufman Strategic Advisors.
Speaking on March 18 at the American College of Healthcare Executives’ Congress on Healthcare Leadership, Kaufman said too many hospital and health system executives are trying to protect their existing sources of revenue instead of adapting to a changing landscape.
“The problem isn’t that we’re not smart,” he said. “The problem is we don’t have imagination.”
Kaufman depicted a difficult present and future for healthcare leaders as well as patients. In 2013, hospital operating margins were at an all-time low, according to Kaufman. He said 25 percent of hospitals in 2013 had negative operating margins in 2013, up from 13 percent in 2011.
“The economics in healthcare are changing dramatically,” he said.
With patients bearing more risk, they are less likely to see doctors or pay for care. Kaufman cited data that found 22 percent of insured people delay medical treatments because of their high costs, while 25 percent of adults in the U.S. have more medical debt than emergency savings. Further, approximately 12 million adults receive wrong diagnoses in outpatient facilities each year.
States are also dealing with huge increases in Medicaid costs that could affect their budgets. Medicaid spending is expected to rise from $450 billion in 2013 to $919 billion in 2023.
From his experiences, Kaufman said he has not seen a shift toward value-based care. He added that payers are using the term “quality” as an excuse to reduce payments to hospitals and health systems.
To succeed in the future, Kaufman recommended hospitals and health systems focus on value-based networks, standardized care, superior service and reasonable cost. Kaufman also said there would be more tiered networks for hospitals based on appropriateness of care, costs and outcomes. He added that medical tourism, bundled payments, reference pricing, private exchanges and high deductibles would become more popular.
According to Kaufman, healthcare transformation will be “led by caregivers, not the suits,” meaning that executives must engage doctors and listen to them in order to succeed financially.
Executive Editor
Tim Casey joined TriMed Media Group in 2015 as Executive Editor. For the previous four years, he worked as an editor and writer for HMP Communications, primarily focused on covering managed care issues and reporting from medical and health care conferences. He was also a staff reporter at the Sacramento Bee for more than four years covering professional, college and high school sports. He earned his undergraduate degree in psychology from the University of Notre Dame and his MBA degree from Georgetown University.