Hospitals anticipate revenue drop due to PPACA

Health reform will cause hospital revenues to drop, a new report suggests.

A survey from HighRoads and consulting firm SullivanCotter finds 55 percent of hospitals and health systems anticipate a drop in revenue as a result of the Patient and Protection Affordable Care Act. Almost 30 percent, though, say they are unsure what effect the bill will have, yet another sign of the volatile nature the industry is facing.

A smaller percentage (12 percent) says they anticipate an increase in revenue.

“Hospital and health system’s financial health has a direct impact on the benefits offered to health care employees,” says Maureen Cotter, senior principal at HighRoads. “Even though 70 percent of those surveyed stated that they are committed to providing coverage in the long term, and no organizations have plans to discontinue coverage now or in the future, the coverage provided may take a new shape.”

She noted among those surveyed, 42 percent plan to become an accountable care organization, and 18 plan to structure their employee health plan as an ACO-like program.

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One feature unique to health systems and hospitals is their ability to create their own smaller provider network for employees to select from so that the hospital could essentially “pay itself” for delivering care to its employees, HighRoads noted.

 But the survey found there’s no set standard of claims accounting for these types of services. The most common answer was to use the standard carrier negotiated discount (30 percent), yet many organizations are using a deeper discount in one form or another. Organizations with a conservative approach to the accounting treatment of ‘domestic claims’ may trigger the excise tax under PPACA earlier than those with different approaches.

The survey of Employee Benefit Practices in Hospitals and Health Systems was performed by HighRoads and SullivanCotter between November 2011 and January 2012. The survey received responses from 178 participants, including 126 health systems, which had an average employee range of between 3,000 and 9,500.

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