ACA aftermath: 4 ways hospitals adapted to regulations

A new report by the Milbank Memorial Fund and the New England States Consortium Systems Organization examines how the Affordable Care Act changed the healthcare regulatory landscape and how hospitals responded. 

The report (PDF) found four areas where the healthcare reform law significantly changed the game for hospitals: utilization, industry consolidation, payment reform and public health.

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Utilization and financial figures are fairly similar to what they have been in the past, but the report notes that the data included was from before 2014, when many of the key elements of the ACA, like its individual mandate, took effect. However, one area for improvement is in the emergency department, which has continued to see rising rates in the number of visitors. Part of the problem, according to the report, is that some newly insured patients may not have access to or may have trouble making an appointment with a primary care provider, so they turn to the ER for care.

Hospitals in states that expanded Medicaid naturally saw an increase in Medicaid patients coming in for care, but the rates of uncompensated care have dropped compared to pre-expansion levels (making up about 3% of operating costs compared with 4% previously).

Consolidation has been another response to the ACA’s changes, according to the report. Consolidating organizations or services allows for greater leverage when negotiating with payers, and can increase a hospital’s or system’s available capital to adapt to new information technology requirements. Opinions are split on how much mergers truly benefit patients, however, as they can reduce health disparities, but typically lead to increased costs.

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The ACA has also forced providers to examine ways to reduce costs while also improving quality. Organizations have taken a two-pronged approach, according to the report: adopting new payment models and investing in population health programs.

In response to readmission penalties, for instance, many hospitals have developed better care coordination strategies with post-acute care providers. Some have entered accountable care organizations, like the Medicare Shared Savings Program, to improve public health, though there is plenty of room for further investment in population health programs, according to the report.

Analysts said that state policymakers must include hospitals in health reform discussions moving forward, considering that

• Consolidation could lead to continued inflation in healthcare costs. Decision tools can make it easier for providers looking at consolidation, and policymakers need to have better guidelines for when they can intervene.
• States may need to follow the federal government’s lead for alternative payment models.
• Population health initiatives need support from state leaders in addition to providers to fully succeed.