Introduction
Significant changes in healthcare provision facilities continued to increase after the Enactment of the Affordable Care Act. Health facilities, both profitable and non-profitable, have experienced some changes in the past eight years in the way healthcare cost is being covered. These changes have had an impact on Profit and charitable health organizatioins. On this paper, we compare and contrast the economic implications that Affordable care act provisions have had on both hospice and philanthropic facilities.
Background Information
ACA was intended to expand insurance coverage on health on the insured and the uninsured. Since ACA being signed into law and being implemented in some state, it has increased the number of people under insurance. ACA provision has made it easier for families to access healthcare services. For the first time in a long time, the cost of healthcare in the U.S slowed down between 2010 and 2012. ACA provisions helped reduce the number of financial resources that Americans spend on health care and support to maintain bolstering paychecks of employees. ACA provisions have helped improve the health in all organizations and increasing the productivity of the health workers. Medicaid coverage has helped reduce the medical cost, improving the financial security of the society in the face of sickness. Families today can afford to pay for health services, as Medicaid insurance covers partial expenses. ACA provisions have had a positive impact on society as a whole. Evidence indicates that ACA provisions have had a positive impact on society in general. One of the key players who have been affected by the ACA provisions is hospitals.
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ACA aim was to expand health insurance coverage to Americans who could not afford to pay for their insurance. Consequently, it was meant to have the financial condition and utilization implications on health providing organizations ( Young, 2017) . Therefore, one economic impact of the ACA provision on hospitals was to reduce the uncompensated care costs. Before the implementation of ACA, some patients were unwilling or unable to pay for the health services they received. Such patients left unserviced debt, or in some instances, hospitals can provide charity care. These debts, when accumulated account for bad debts, which increased the uncompensated care cost in most American hospitals. After the implementation of the ACA hospitals, both profitable and charitable, have been able to reduce uncompensated care costs.
ACA provisions include Medicare-related payment cut set and payment reforms for health facilities. The ACDA provided payment reforms that involved multiple programs that would link reimbursements for care catering facilities with performance metrics that focused majorly on efficiency and quality ( Haught , Dobson , & Luu , 2019) . Some of the programs employed under ACA for hospital reimbursements include Hospital Readmissions Reduction Program; Medicare Shared Savings programs, Hospital Value-Based Purchasing Program, and so forth. Center for Medicare and Medicaid services proposed alternative payment channels by 2018 intending to impact the financial condition and quality of care. Some of the alternative payments arrangements proposed include bundle payment rather than a fee-for-service payment. Such payment is supposed to help Americans who have been insured to make payments for care purposes. It has resulted in a reduction in uncompensated care cost both in Profit and nonprofit health facilities.
ACA enactment led to a decrease in the number of uninsured people by 2014 by 30%. For the hospitals, it was beneficial as it helped reduce the number of people who could not pay for the services. As a result, it helped the health care facilities reduce the provision for bad debts. Therefore, ACA implementation led to an improved financial condition in the hospital. Hospitals, both charitable and profitable, accept patient with Medicare insurances because they are positive that the government will reimburse partly finances for the care provided to the patient. The insurance eliminates the fear of bearing the entire cost of treating a patient.
From a hospital administrator perspective, ACA led to the growth of revenue from the population that was insured under the ACA. As identified, for charitable organizations that lower the costs of payment were also going to get paid when their entire client was insured in some way ( Cunningham, Garfield & Rudowitz, 2015) . For profitable facilities, an increase in revenue was experienced as there was a reduction of bad creditors. The ACA increased the capacity of care seekers to pay for the services acquired from hospitals. Hospitals could decide whether to increase the cost of their services as a way of raising revenue. In the end, hospitals, both charitable and hospice, improved their revenue capacities.
An increase of the Insured population meant that a large population was going to be experienced in health facilities. Consequently, it would increase the number of care seekers, both inpatients, which would increase the demand for resources in hospitals to provide the required services ( Cunningham, Garfield & Rudowitz, 2015) . The largest population that was initially uninsured meant that they could not attend to hospitals to get treated as the entire cost would be on them. One of the requirements of ACA on hospitals is to improve the care quality. As the shift went from a system reliance on the volume of care to care quality, there was a need to increase the quantity and quality of human resources. Increased population in health facilities meant increased stress to the caregivers. It would mean that the hospital needed to increase the number of nurses to provide care to both the outpatient and inpatients. It would also mean that hospitals had to provide education to the human resources to improve on quality care that the facilities offer to their clients.
ACA provisions made it easy for an organization to access patients’ information on the eligibility of patients. Initially, it was difficult for health facilities to accesses patients’ knowledge about the use of insurance. It was economically dragging the ability of hospitals to provide care to patients. An increase in the population under protection made it easy for health facilities to access information of patients under the insurance. It has lowered the cost of retrieving patients’ data for insured patients and those eligible for coverage.
All hospitals received fewer resources for the same services for the short-run based on the short term decision of the government to lower Reimbursements of Medicare. Medicare reimbursement refers to all payment made to hospitals in return to the services rendered to beneficiaries of the Medicare. Under the ACA provisions, there was a proposal to lower the reimbursement for all the hospitals in the short run.
Hospitals were required to prepare a financial assistance policy under ACA ( Young, 2017) . Each health providing facility will be necessary to outline financial assistance policy and practices to the public. Each healthy facility will be required to provide financial assistance to people with healthcare needs whether they are uninsured, underinsured are ineligible for government assistance or unable to cater for emergency or other medical services based on an individual’s financial situation. Unlike before, athletic facilities under the ACA provisions were obligated to prepare a financial assistance policy. It was a requirement that came to expanding Medicare. Hospitals were required to show good will of putting health first before considering the capacity of an individual to pay. In cases, on emergencies, the hospitals are supposed to cater to the patient without considering whether the person is insured, uninsured, or ineligible for government assistance. The main focus of the government is to ensure that society can access health care at ease without considering their financial situation.
Hospitals norm will be more quality and less volume. ACA required all health facilities to adopt the nature of Accountable Care Organizations (ACOs). Incentives provided by the law need organizations and physicians to come together and form ACOs ( Cunningham, Garfield & Rudowitz, 2015) . Health facilities are required by the law to focus more on delivering quality rather than focusing on treating many people to acquire money. Successful organizations have long been criticized for their focus on providing hastened services for patient to serve more people. The more people that health facilities serve the more resources such institution acquire. The aim is to discourage health facility from being economic driven and focus on health. Healthy facilities have been focusing on serving more people to raise resources to run the health facilities, thus preceding delivering quality health services. The law provides financial incentives to hospitals to encourage them to adopt a system that addresses the quality of health that they offer to society.
From the income of the hospitals, there was going to be an increase in Medicaid revenue for hospitals in states that implemented the expansion of Medicaid. An increase in the number of the insured people across the states that enacted the ACA, there was an increase in hospital income compared to hospitals that did not implement Medicaid expansion. Medicaid expansion increased the number of insured individuals, especially for low-income earners. Consequently, hospitals both charitable and profit-oriented were going to experience an increase in the volume of patients they were going to receive. An increase in a patient that was insured meant that the hospitals were going to receive an increased level of income.
ACA requires hospitals to link payment to outcomes. Both Profit and nonprofit health facilities under ACA provisions are required to report their performance ( Young, 2017) publicly. Hospitals in states that have enacted the Medicaid expansion will be needed for the publicly report their achievements as an eligibility requirement for reimbursement. The main focus is to measure whether health facilities can improve their care in the process of serving all Americans without discrimination. Compensation will highly be determined by the capacity of the hospitals to offer quality services. The method of linking payment to the outcome will require these hospitals to develop a report that is published to the public, and the result will determine the payments. Just like for all corporations are required to report their financial statements publicly, health facilities will report their performance.
The law provides that hospitals that perform well will be financially rewarded. The performance was to be determined through a combination of patients’ satisfaction surveys and clinical outcome ( Cunningham, Garfield & Rudowitz, 2015) . The government aims at ensuring that health facility improves the quality of services that they provide. Incentives will be in terms of financial and other forms of reward. In return, the government will develop the tools to measure the performance of the health facilities across the country. The government, on the other hand, will punish health facilities that perform poorly. The hospital that will record excessive readmissions will be penalized with lower Medicare reimbursements. In a push to ensure hospitals raise the quality of services they offer to the society, those facilities with improved services will be rewarded by financial incentives while those that fail to improve the services they provide to the society will have their Medicare reimbursements reduced.
Healthcare facilities, both charitable and hospice care providers, have been affected by ACA provisions. People pay for the health services received from health facilities. There are different ways that Americans uses to pay for healthcare services such as insurance or from the pocket. Both charitable and profitable healthcare will be forced to improve the quality of services they provide to the community.
Impact of ACA on charitable organizations
Economically ACA affected all care providing institutions. However, generous health facilities were affected differently compared to business-oriented health organizations. According to Luthra ( 2017), the Affordable Care Act mandated charitable health organizations to meet several requirements that are economic oriented to meet tax exemption standing. Charitable organizations requirement to being tax exempted included a regular survey to respond to the health needs of the community. Under ACA, nonprofit hospitals are required to expand their responsibility beyond clinical care by engaging with the communities. For these organizations to be exempted from the tax will have to do more than just providing regular services to society. On the other hand, profit-oriented hospitals are required to improve their services. The profitable organization is not exempted from taxation. Successful organizations are to improve their services, and they will be provided with incentives but to enhance the kind of services that they provide to the community.
Charitable organizations were required to lower or set a cost limit on the care expenses for persons eligible for financial assistance. The non-profitable health organizations were also required to ensure patients eligibility status on financial aid early on ( Luthra 2017). Successful organizations were not required by the Act to lower the cost or set a limit on care expenses for patients. Successful organizations are free to charge their services as they wish on their client. The reasoning is that the government is not supposed to interfere with the charges that successful organizations ask for the services they offer.
Charitable care amounts experienced a drop with the expansion of Medicare ( Luthra , 2017). After being signed into law, the Supreme Court ruled that it was for each state to decide whether or not to implement the Act. As a result, some state did not partake in the expansion of the Medicaid. Lack of a unanimous decision by all the sate led to complications in charitable care. In all countries that engaged in expansion, hospitals stay for uninsured patients dropped by 44% in the span between 2013 and 2014. In states that did not adopt the Act inpatient stay rose by 6%. In charitable organizations in 26 states that implemented Medicaid expansion experienced a drop in the number of uninsured patients dropped by a third. In all states that enacted the expansion, there was a significant reduction in charitable care to society. As an effect, there was an average drop of 30% in charity care for hospitals across states that expanded Medicaid. The profitable organizations did not experience any reduction in the number of persons visiting the facilities.
ACA provides that in any case, the ACOs reduce the cost of care by providing the high-quality care they can keep part of the saved resources. The law provides economic incentives to Accountable Care Organizations ( Luthra , 2017). ACOs refer to care providers and hospitals that join to provide care which is highly coordinate to Medicare patients voluntarily. ACOs work like charity organization, but the main focus is on the Medicaid patients. Under the ACA organizations operating as ACOs are to save some of the financial resources that they save by providing high-quality care to patients.
Conclusion
The enactment of the ACA has come with many changes in the health sector. One of the most affected parties in the Act is the health facilities. ACA economic impact on hospitals can be easily identified. All health facilities have been required to invest more on their capital assets because of the increased population visiting health facilities. ACA has affected the financial condition and utilization of all health facilities. The hospitals are required by ACA to shift the focus from the economic nature of hospitals to providing quality care. The Act proposes that hospitals should improve the quality of care they provide to society, and not focus on serving more people. Hospitals are required to report their performance as payments are linked with performance publicly.
Unlike the profitable health organizations, charitable organizations will have to expand their services to the community for them to be exempted from tax. The ACA requires these organizations to go to the community to meet the needs of the patients for the government to exempt them from taxation. Non-profitable organizations will be required to provide their performance, which will determine the amount of reimbursement ( Luthra , 2017). ACOs which operate like charitable organizations were required by the Act to improve the quality of services offered to the society.
Economically, all hospitals under the ACA are required to shift the focus from volume based to quality-based care. Besides making care accessible to the majority of the population, the Act also aimed at improving the care quality across all states. Hospitals, therefore, had to shift the focus from income to improving the services offered.
References
Cunningham, P., Garfield, R., & Rudowitz, R., (2015). How are hospitals faring under the Affordable Care Act? Early Experiences from Ascension Health, The Henry J. Kaiser Family Foundation, Menlo Park, CA, USA .
Haught , R. Dobson , A. & Luu P.H. (March 14, 2019). How Will Medicaid Work Requirements Affect Hospitals’ Finances? Retrieved from https://www.commonwealthfund.org/publications/issue-briefs/2019/mar/how-will-medicaid-work-requirements-affect-hospitals-finances
Luthra , S. ( March 16, 2017). Obamacare Pushed Nonprofit Hospitals To Do Good Beyond Their Walls. Now What?. Retrieved from https://khn.org/news/obamacare-pushed-nonprofit-hospitals-to-do-good-beyond-their-walls-now-what/
Young, G. J., (2017). Hospitals in the Post-ACA Era: Impacts and Responses.
