The ongoing cuts in disproportionate share hospital (DSH) payments as part of the Affordable Care Act (ACA) could lead to as many as 225 hospitals closing around the country, according to a new study in the journal Health Affairs.
The study, conducted by researchers at Tulane University and the Georgia Health Policy Center, analyzed more than 2,100 acute care hospitals. Of those, 529 are heavily dependent on DSH payments, while another 225 are in weak financial shape, according to the study. Forty-two percent of those 529 hospitals were "highly reliant" on DSH payments for their revenue.
Altogether, the DSH payments will likely be cut by $35.1 billion between 2007 and 2014, according to Health Affairs.
"These payments are subsidizing many at-risk hospitals," Mark Diana, associate professor of Global Health Systems and Development at Tulane University School of Public Health and Tropical Medicine, told NewsWise. "Policymakers should recognize that many hospitals will be affected by these cuts and decreases in revenue will affect their ability to provide care for vulnerable populations."
At particular risk are hospitals in the two dozen states that have yet to expand Medicaid eligibility as part of the ACA. As a result, they have little in the way of backup source of revenue to make up for the DSH cuts. Although other sources of ACA-related revenue are expected to cut uncompensated care costs by $5.7 billion over the next year, the large bulk of those savings are going to states that have expanded their Medicaid eligibility. Although it was thought that some states might soften their stance toward Medicaid expansion after the mid-term elections, whether they actually will remains to be seen.
Altogether, hospitals spent about $45.9 billion on uncompensated care in 2012 in a combination of charity care and bad debt, although that figure is typically based on non-discount charges.