Challenges to the financial stability of the American healthcare system

"Hospitals are being asked to do more with less. They must treat every patient, regardless of their ability to pay, and are struggling to maintain access to care under these financial conditions," Krishnamurthy said.

In addition, hospitals are not only dealing with financial shortfalls, but also increased regulatory requirements, such as maintaining cybersecurity standards to prevent cyberattacks.

Another major administrative burden that is driving up healthcare costs, leading to staff burnout and in some cases poorer patient outcomes, is the rapidly rising number of prior authorizations. Krishnamurthy said both Medicare and private insurers require many prior authorizations before a patient can diagnostic tests, drugs or treatments. 

A recent American Medical Association (AMA) survey found 78% of physicians reporting that prior authorization often or sometimes results in their patients abandoning a recommended course of treatment. The survey found 94% of physicians say prior authorization causes delays in the delivery of care. About 55% of respondents said care is delayed “always” or “often.” Read more

AHA advocacy efforts to keep the system stable

All these factors have called into question the financial stability of the American healthcare system. The AHA says these are critical issues that require urgent attention and action from policymakers. AHA said it is advocating for policies that protect hospitals' ability to provide high-quality care to all patients and to ensure healthcare services remain accessible across the nation. These advocacy areas include:

Federal funding and reimbursements: Essential healthcare services in all communities require improved federal funding for Medicare, Medicaid, the Children’s Health Insurance Program, and the health insurance marketplaces. Government programs often reimburse providers significantly less than the actual cost of care. AHA is actively working to stop cuts to Medicare and Medicaid reimbursements. They aim to protect Disproportionate Share Hospital (DSH) payments and prevent harmful site-neutral policies from impacting Medicare reimbursement. 

Patient access: Ensuring patient access to primary care and other outpatient services is crucial. This involves rejecting additional payment cuts and policies that restrict access to certain sites of care.

Commercial health insurers: The AHA is advocating for accountability among insurance companies, focusing on reducing the administrative burden on hospitals. This includes addressing prior authorization policies and other practices that delay care and increase costs. Holding commercial health insurers accountable also includes ensuring adequate provider networks, reducing account receivables and limiting inappropriate service denials.

Workplace safety: Strengthening workplace safety by enacting federal protections for healthcare workers against violence and intimidation is necessary. Krishnamurthy said this is needed to create a better working environment and to help retain staff during the overall growing shortage of healthcare workers.

Drug pricing: The AHA also wants to protect the 340B drug pricing program to ensure that hospitals can maintain vital patient services and expand access to care for lower income patients.

Workforce shortages: AHA is addressing physician and nursing shortages by advocating for increasing residency slots eligible for Medicare funding and reauthorizing nursing workforce development programs.

Telehealth and home programs: Making certain telehealth services permanent and creating a permanent Centers for Medicare and Medicaid Services (CMS) hospital-at-home program are important steps.

Tax-exempt status: Protecting not-for-profit hospitals’ tax-exempt status is vital for their financial health.

The AHA is calling on Congress to ensure that Medicare reimbursements are not cut further. They emphasize the need for a sustainable reimbursement model that covers the actual costs of providing care. Krishnamurthy stresses that hospitals need support from Congress to continue delivering high-quality care and maintaining their role as pillars of their communities.

"First and foremost, I think we need to ensure that they're not cutting reimbursement, which is already low. I think that's the number one thing. I think before we can even start thinking about what other reforms do we want to Medicare policy, we want to stop these harmful policies from going into effect in the first place. I think there is this narrative that hospitals are cash rich and they're able to provide all of these services to their patients. But the fact of the matter is not all hospitals are in that situation and hospitals need support from Congress so that their reimbursements aren't cut even further to the point where they simply just can't do business," Krishnamurthy said.

He added that money is also needed to continue to expand care and address things like health disparities, to bring in state-of-the-art equipment, better diagnostic testing, new treatments and to ensure high quality patient care.