What Health Reform Will Mean for Physicians and Hospitals

For physicians:

1. Increased demand for physicians. With 32 million more Americans expected to enter the health insurance market, demand should rise, especially for primary care physicians, the Philadelphia Inquirer reported. This occurred when Massachusetts passed its statewide universal health care in 2006. However, the expansion in coverage will not happen for a few years, until 2014.

2. No permanent fee fix. The reform legislation does not permanently repeal the Medicare sustainable growth rate formula, which is again set to trigger a 21.2 percent pay cut for physicians at the end of the month. "It's really unclear what pathway the House is considering to change the situation," Robert Bennett, a government affairs representative for the Medical Group Management Association told HealthLeaders this week. "Now we are looking toward the April deadline, and then Congress will have a recess, and they are really running out of days."

3. New independent panel setting reimbursement rates. The new Independent Payment Advisory Board "could unilaterally reduce Medicare payments without any public input," said James Goodyear, MD, president of the Pennsylvania Medical Society in the Carlisle (Pa.) Sentinel. "The current IPAB framework could result in misguided payment cuts that undermine access to care and destabilize healthcare delivery," added AMA President J. James Rohack, MD, in a release.

4. More bureaucracy.
"The health system reform bill creates more government bureaucracy" and "installs mandates too numerous to list,” Dr. Goodyear told the Sentinel. "We see no reduction in administrative burdens for physicians and no reform in the way healthcare services are paid under the Medicare program," added Joseph Reichman, MD, president of the Medical Society of New Jersey, in the Philadelphia Business Journal.

5. No tort reform. "The legislation does not include any medical malpractice reforms that would lower physician costs and prevent defensive medicine practices," Dr. Reichman told the Philadelphia Business Journal. Without tort reform, physicians "are forced to practice more defensive medicine than is necessary," the Pennsylvania Association of Health Underwriters told the Philadelphia Business Journal. The AMA and other organizations would like a cap on non-economic damages, but all the bill offers is $50 million in grants to states to explore alternative means of resolving medical liability claims.

6. Elimination of new physician-owned hospitals. The bill would prevent any new physician-owned hospitals from opening after the end of the year and, except for a very limited exception involving physician-owned hospitals with a high Medicaid patient population, prevent existing hospitals from growing. The provisions "virtually destroy many of the hospitals that are currently under development, and leave little room for the future growth of the industry," said Molly Sandvig, executive director of Physician Hospitals of America. "It shouldn't make a difference who owns the hospital," Dr. Rohack told Medscape.

7. Heavy reliance on Medicaid.
"The expansion of the Medicaid program, while laudable, is problematic," Dr. Reichman told the Philadelphia Business Journal. "The payments in New Jersey's Medicaid program are among the lowest in the country, resulting in a majority of our physicians opting out of it altogether."

For Hospitals:


1. More paying patients. The addition of 32 million paying patients will benefit hospitals that treat great numbers of uninsured, such as Grady Health System in Atlanta. The reform bill "should take some of the operational pressure and the near-death experience Grady faced in 2007," Grady CEO Michael Young told Channel 11 in Atlanta. The bill's expansion of Medicaid in particular would erase most hospitals' bad debt within five years, Dan Mendelson, president of the consultancy Avalere Health, told the Associated Press. However, the expansion wouldn't take effect until 2014, and in the meantime, hospitals will look for mergers as a way to lower expenses, Paul H. Keckley, executive director of the Deloitte Center for Health Solutions, told Bloomberg News.

2. Reduced Medicare reimbursements.
Hospitals are giving up $155 billion in Medicare funds over the next decade, or about an 8 percent cut, but they are expected to gain $170 billion because of fewer uninsured patients. Some are skeptical, however. Michael Walsh, CFO at Abington (Pa.) Memorial Hospital, told the Philadelphia Inquirer it would be a "leap of faith" to believe that there would be enough new revenue to cover the cuts. He decried the notion that "poof, we have this healthcare legislation and now there's coverage and the problems go away."

3. Quieter EDs. With more people going to physicians for care, the hospital ED shouldn't be as busy, Jim Krauss, CEO of Rockingham Memorial Hospital in Harrisonburg, Va., told WHSV TV. However, it could be that "there'll be more demand than there is supply of doctors, which puts a potential risk on filling up ERs," Mr. Young at Grady said. "I think there's going to be strain getting into an internal medicine doctor's office or a family doctor just as [there will] be this big push for more service."

4. Pressure to be more efficient. Hospitals will need to "identify waste and be even more cost efficient," David Shulkin, MD, president-elect and COO of Morristown (N.J.) Memorial Hospital told the Daily Record. "Redoubling our efforts in this area will not be easy, nor comfortable, but it must be done to effectively serve our community.'' Cyril Chang, a healthcare economist at the University of Memphis, told the Commercial Appeal that "hospitals, physicians and other providers will be asked to work harder and provide more services for more people."

5. More cooperation with other providers.
Health reform will require hospitals to collaborate more closely with physicians and other providers. "Going forward, success will require sustained effort and unparalleled cooperation from everyone on whom Americans rely for their healthcare, including hospitals, physicians and other caregivers, and insurers," Chip Kahn, president and CEO of the Federation of American Hospitals, said in a release.

6. Advantages for hospitals with tax-exempt insurance plans. While insurers have to pay a new fee, it will represent only half of premiums for tax-exempt insurers such as Kaiser Permanente and Geisinger, according to the Associated Press. Other hospitals that own small, not-for profit health plans should benefit, too.

7. More Medicaid payments at lower rates. Stephens Mundy, president and executive director of CVPH Medical Center in Plattsburgh, N.Y., told the Press-Republican the hospital will see an annual decrease in federal reimbursement rates for Medicaid patients in the next 10 years and an increase in eligibility for Medicaid. While the cuts in Medicaid happen immediately, the expanded coverage won’t take effect for several years, he said.

Contact Leigh Page at leigh@beckersasc.com.


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