Medicaid Expansion – Health Care
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New research suggests that hospitals with strong financial results could do more to help patients in need of charity care.

According to a research letter published in JAMA Internal Medicine, hospitals that produce high net income spend proportionally less than their peers on charity care for both insured and uninsured patients.

For every $100 of net income earned in 2017, hospitals ranked in the top quartile for net income provided $11.50 in charity care for uninsured patients and $5.10 for insured patients.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

In comparison, the third quartile of hospitals provided $72.30 for uninsured patients and $40.90 for insured patients.

While the top quartile of hospitals generated more than 100% of total overall net income measured in the study, those same hospitals provided only a little more than half of total charity care.

Hospitals in the bottom quartile supported more than 17% of total charity care provided, despite incurring substantial net losses.

Researchers also looked at the difference between charity provided to insured and uninsured patients to get a better sense of how much of charitable care provided by hospitals amounts to discretionary spending, according to lead author Ge Bai, Ph.D., CPA, an associate professor at Johns Hopkins Bloomberg School of Public Health.

Where uninsured patients receive charity care in the form of a full or partial discount on their bills, hospitals tend to waive deductible and coinsurance payments for insured patients. The study noted a decrease in the amount of charity care provided by hospitals in states that expanded Medicaid as compared to those that did not.

“Charity care provision to uninsured patients is sensitive to the number of uninsured patients,” Bai told FierceHealthcare by email. “States that adopted Medicaid expansion have a lower proportion of uninsured patients than other states, and thus it is expected that hospitals in the former states would provide less charity care to uninsured patients than hospitals in the latter states. In contrast, charity care provision to insured patients is not subject to the same constraint, and thus is more discretionary.”

While it’s likely that lower demand for charity among uninsured patients produced some part of the decrease in charity spending in states that expanded Medicaid, it’s unclear whether the policy shift had an effect on charity spending for insured patients. Bai indicated a look at pre- and post-Medicaid expansion spending across those categories would be ripe for future research.

The study notes that the healthcare system’s current legal and regulatory framework gives nonprofit hospitals broad discretion in how they draw up their financial assistance policies. The authors recommend that hospitals consider reexamining their eligibility criteria to provide greater financial assistance to both uninsured and underinsured patients.

Providing more assistance voluntarily would likely be better for all parties involved than waiting for policymakers or government regulators to act, according to Bai.

“It’s very challenging to regulate charitable actions, which are directly linked to the financial viability of the entity,” she says. “The cure could be worse than the disease.”

The number of rural hospitals that shut their doors reached a record-setting 19 last year, according to a new report that aims to pinpoint why hospitals are closing.

The Chartis Center for Rural Health and iVantage Health Analytics released a report (PDF) Friday that found 120 rural facilities have shut their doors since 2010. The study also explored indicators that can lead to a rural hospital’s demise.

“The accelerated rate at which rural hospitals are closing continues to unsettle the rural healthcare community and demands a more nuanced investigation into rural hospital performance,” the study said.

Case Study

Across-the-Board Impact of an OB-GYN Hospitalist Program

A Denver facility saw across-the-board improvements in patient satisfaction, maternal quality metrics, decreased subsidy and increased service volume, thanks to the rollout of the first OB-GYN hospitalist program in the state.

See how

The number of rural hospital closures lessened somewhat in 2016, going from 17 in 2015 to 12. That decline though was short-lived, as “there have been 34 closures in the last 24 months,” the report said.

A slew of factors has exacerbated the closure of rural hospitals in recent years. A 2019 report from the American Hospital Association found that hospitals—which are traditionally cash-strapped—are facing workforce shortages, high drug prices and inadequate payment from government programs.

The Chartis report laid out warning signs that a rural hospital was on course for closure. The report looked at three years of financial and operational data for rural hospitals before they closed.

The report identified nine indicators to measure whether a hospital is ripe for closure. Some of the indicators include occupancy rates, age of the facility, system affiliation, total revenue and case mix index, which is the ability to handle a broad mix of services.

“According to this model, for example, a one percent increase in the percent change in total revenue can decrease the likelihood of closure by three percent on average,” the study said. “Similarly, a one percentage increase in the proportion of outpatient revenue decreases the likelihood of closure by five percent on average.”

Another key indicator is whether the state expanded Medicaid under the Affordable Care Act.

“Rural populations are shown to be older, less healthy and less affluent than urban counterparts,” the report said. “Medicaid expansion creates opportunities for individuals in rural communities to move from the ranks of the medically uninsured.”

The model found that being in a state that expanded Medicaid decreases the likelihood of closure by 70% on average. So far, there have been 14 states that did not expand Medicaid.