While specifics of health reform remain gauzy at best, financial research firm Fitch Ratings has already developed a profile for the kind of non-profits that will survive health reform as it's currently emerging.
While proposals for health reform aren't clear, and timetables for rolling them out are still up in the air, it seems clear that hospitals need to be prepared for big changes in reimbursement methods, such as bundled payments, pay for performance, changes to charity care requirements and shifts in disproportionate share payments.
Fitch argues that hospitals that have solid physician alignment strategies, high levels of integration, a strong capacity to measure, report and deliver superior outcomes, favorable cost positions related to competitors and sufficient scale and financial strength to cope with potential decreases in reimbursement are most likely to remain standing in the face of such reform-related changes.
Fitch also believes that hospitals will enjoy some cushion from reform-related changes if they've shown the ability to consolidate, cut back on services and improve efficiencies in recent hard times. What's more, with stimulus funding available for capital projects and IT investment, some will be be able to expand.
So, what will happen to hospitals if commercial health plans are forced to lower their rates a part of an overall restructuring of that sector? While hospitals typically have multi-year contracts, and won't feel the pain for a while, eventually they're likely to see lower reimbursement--and hospitals with higher cost structures and poorer quality score are more likely to lose contract competitions, Fitch says.
To learn more about Fitch's projections:
- read this Fitch press release (reg. req.)
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