One hospital’s gain is another hospital’s loss

hospital healthcareThe effect of the Affordable Care Act on hospitals seems to be in direct correlation with whether or not the state the hospital is in has agreed to expand Medicaid. Take Chicago's Cook County Health & Hospitals System and Atlanta's Grady Health System, for example. Both are public, ‘safety net’ hospitals that provide services to an incommensurate portion of local poor, uninsured patients (half of the patients at Cook and about a third at Grady.) in urban counties where the poverty level is slightly over the national average. However, the former has become profitable for the first time in almost 200 years, while the latter – like Blanche Dubois – continues to depend on the kindness of strangers. These two hospitals are only 700 miles apart from each others, but there is a divide between them that goes beyond geography. “From a global perspective, it seems like the ACA is working,” senior director at Standard & Poor’s Kevin Holloran said. Except in non-expansion states where “it’s really a neutral. It’s just the status quo.”

Georgia is one such states with conservative electorates that oppose the Affordable Care Act and refuse to take money for Medicaid expansion, whereas Illinois is one of the states that have accepted federal money to expand Medicaid In the latter 30 states, some large public hospitals are in the black for the first time in a long while, but in the former 20 mostly Southern states Obamacare has been as meaningless as the first three quarters in a basketball game. “Providers in these states are going to be at a disadvantage,” senior director at Fitch Ratings Jim LeBuhn said. “It’s going to make it that much more challenging for these providers to maintain their financial profiles.” In fact, at the Georgia facility, numbers have been immutable. “We’ve seen no difference from the Affordable Care Act,”  Grady's chief executive John Haupert said. Conversely, the enrollment of about 170,000 of an estimated 330,000 eligible for the expanded Medicaid “has been a sea change for us,” Cook County Health's chief executive Dr. John Jay Shannon said. “For the first time in our history, we need to compete for our patients. A world of improved access is also a world of choice.”

The number of people covered by Medicaid has increased by 21% to 71.1 million since 2013, when Obamacare launched its first enrollment period. In contrast, about 4 million poor Americans without insurance have also been left without Medicaid coverage, for which they would have qualified had their states opted for expansion. In states that did expand, on the other hand, non-profit hospitals reported 13% less bad debt from unpaid bills in 2014, on average. At the same time, “hospitals in non-expansion states saw bad debt increase through much of the year,” according to Moody’s Investors Service. Moreover, hospitals in Medicaid expansion states reported an average 32% decrease in uninsured patients and a 40% cut in unreimbursed costs of care for patients with no ability to pay (charity care costs). Additionally, adults who gained Medicaid coverage were 55% more likely to have their own doctor after one year that those who didn’t.  In non-expansion states, the number of uninsured patients dropped by 4.4% and charity care costs dropped by 6.2%.

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