U.S. Hospitals and Health Systems: Issues Threatening Delivery of Quality Patient Care
Christopher Fisher, maxRTE Business Development Director
There are approximately 5,200 acute-care hospitals in the U.S., including elite health systems (research and care in critical, life-threatening areas), community and specialty hospitals, for-profit and non-profit chains, the unique vertically integrated healthcare system Kaiser Permanente, and safety-net hospitals. Many of these institutions face financial challenges, particularly safety-net hospitals that serve a huge percentage of Medicare and Medicaid patients.
Costs, access, and quality
Considering that costs have continued to grow at a percentage higher than inflation, it’s impressive that the American healthcare system continues to do a pretty good job of delivering quality care to more than 325 million people. In other countries, there are pockets of care that are certainly better and more advanced, but somewhat limited to pockets versus an entire system.
However, rising costs is a trend that could impact the quality of care, with some costs such as pharmaceuticals, technology, bricks and mortar, and labor posing particular challenges. In addition, increasing costs logically lead to higher patient treatment costs, which in turn affects access to affordable care.
Access is already compromised for financially challenged populations, but provider shortages (especially among specialties and subspecialties) have evolved that extend this issue more broadly. The Association of American Medical Colleges predicts an alarming shortage of up to nearly 122,000 physicians by 2032 as the population grows and ages to create demand that outpaces provider supply. This forecast is causing great concern over delayed care that can negatively impact outcomes.
Seeking to accelerate supply, the American Medical Association is exploring shortening a lengthy education process with medical school, residency, and fellowship. Partnering with Kaiser Permanente Northern California, the University of California, Davis School of Medicine has initiated a six-year model—three years each of medical school and residency.
Our healthcare systems, in particular hospitals, are taking stock of the political debate over healthcare preceding the national 2020 election. The “Medicare for all” movement provides adequate “access” at a certain level for everybody in terms of health insurance coverage. However, providers are rightfully concerned that extremely low reimbursement would deter people from pursuing career medicine, thus exacerbating the dearth of physicians and its effect on access. Pragmatists are concerned over financing this giant endeavor.
The “free market” side of the debate is somewhat misleading since 30 to 50 percent of most provider revenue is from Medicare and Medicaid. Free market incentives like health savings plans and transparency help, but there is no totally free market.
The public seems to favor having a public option that allows citizens to buy insurance either from a private company or Medicare. All eyes will be on the State of Washington for results of the first test of a public option, which will launch in 2021. Current public sentiment seems to be in favor of: 1) being able to buy insurance with a pre-existing condition; and 2) having some sort of public option to access health care.
Evolving insurance challenges
Payer strength is snowballing as payers broaden their scope of business. UnitedHealth Group’s Optum, the Advisory Board, Equian and others, and Cigna’s Express Scripts are just two examples. Entrees into technology, consulting, payment, pharmacy benefit management, post-acute care, and provider areas enable health insurers to wield more power in the industry. This trend could conflict with the “patient first” foundation that the practice of medicine was built on if power players pressure provider fees.
Some power payers are even developing their own provider networks and alternatives to health systems and their delivery systems. For instance, Blue Cross Blue Shield Association plans to launch a national provider network in 2021 that spans 55 markets, purportedly to help large employers better control medical costs.
Development of new types of insurance programs like Haven, a collaboration between JPMorgan, Berkshire Hathaway and Amazon to serve their combined 1.2 million employees, will have a negative impact on hospitals and health systems. These new plans will siphon off payments from employed people and commercial insurance that subsidize Medicare and Medicaid, which will shrink the pool of good-paying patients and therefore increase uncollectible accounts receivable.
There is no doubt that the future for U.S. health systems and hospitals is uncertain. Thankfully, there are technologies and processes that can help them avoid being mired in financial crisis due to uncontrollable outstanding patient payments. Find out more at maxrte.com