ACA repeal makes hospitals more vulnerable to closure

Millions of insured Americans could lose health insurance coverage if Congress and the new White House administration make good on their threat to repeal the Affordable Care Act. But they aren’t the only victims.

Many hospitals could also close as a result of the legislative action and the loss of government funds and increase in uninsured Americans who need care.

And these potential closures only add to the growing problem of vanishing hospital beds, according to a Bloomberg report. Indeed, more hospitals have shifted their focus from inpatient to outpatient care for financial reasons, acquiring or opening stand-alone facilities, physician practices and retail clinics.

“It’s been a very tough environment for hospitals,” Jason McGorman, a Bloomberg Intelligence analyst, said in the piece. “They have to get into other areas and businesses to free up cash and generate better margins than inpatient care, which has become a slow-growth business.

The article pointed to the plans of Mount Sinai Health System in New York to close its 856-bed hospital and reopen in the same location as a 70-bed facility. The organization now offers care to patients in their homes to treat conditions that at one point would have been handled within the hospital’s walls.

Hospitals have had to adapt to the new healthcare environment in order to survive, but the uncertainty over the fate of the ACA has only added to their financial concerns. Shares for HCA Holdings Inc. and Tenet Healthcare Corp., which have refocused their services in recent years, dropped considerably after the election of Donald Trump due to fears of the ACA repeal.

Bloomberg noted that hospital valuations are at near five-year lows due to concerns that the government may revoke the public insurance exchanges, which would lead to more bad debt.

The threat of hospital closures is probably greatest in rural America, where 62 million residents live. Seventy-two rural hospitals have closed since January 2010. And a 2015 report predicted as many as 13% of rural hospitals across the country are vulnerable to closure. Indeed, Bloomberg reported that more than a quarter of the 600 rural hospitals at risk of closing will shut down in the next 10 years.