Tuesday, March 30, 2010

The Two Sides of Saving Under Healthcare Reform

Two recent articles caught my attention because they both talk about savings under healthcare reform but from totally different points of view. First was a report by the Center on Budget and Policy Priorities (CBPP) that the savings tauted under healthcare reform by the CBO are real. Next was a review in "Healthcare Financial News" on the latest Moody's Report saying that independent not-for-profit hospitals will be at risk under this bill. These two reports show the dichotomy that we live under in healthcare. Yes, we need to cut cost in the system overall, but taking money away from struggling community hospitals and putting them out of business is not the way to get there.

First let's talk about the good news. According to CBPP the projections of savings under healthcare reform touted by the President are indeed achievable and not "pie in the sky" as the Republicans have told us. But keep in mind that CBPP is a liberal leaning fiscal policy research group. Also keep in mind that all parties acknowledge that the new plan will initially increase costs as coverage is expanded. The savings come down the road with more efficient healthcare delivery in place to a greater percentage of the public. So much can happen between now and then to change things. So even if the actuaries got it all absolutely right, outside factors will most certainly change the assumptions used to project savings. So maybe the good news isn't really so good.

Now let's talk about the bad news. Moody's Investor Service projects that most hospitals should be able to operate relatively unscathed over the next three years because many of the key provisions of healthcare reform do not kick in until 2014. But after that all hospitals, particularly stand alone community hospitals will struggle with the reduced payments. Even though there will be some increased reimbursement from the previously uninsured patients and some add ons from Medicaid for hospitals that have hired primary care physicians, in balance hospitals will need to be extremely efficient to survive. Higher cost providers will not make it.

For those that want to know more about how to get ready for this new era of healthcare, I am presenting a free webinar on "Preparing Your Hospital for the Impact of Healthcare Reform" tomorrow, Wednesday March 31, 2010 from 1:15-2PM CDT. I will present it again in two weeks at the same time. To register, simply go to our website at compirion.com and look under Webinars.

More on this later

Mark Brodeur

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