The Affordable Care act will reduce the number of Medicare patients being hospitalized, saving the federal government money, a study published in the October issue of Health Affairs concludes.
What's uncertain is how lower utilization will affect care quality, say the researchers, who note the "implications for patient care and health outcomes are not yet clear."
Looking at data from 10 states between 1995 and 2009, researchers concluded a 10 percent reduction in the Medicare price was associated with a 4.6 percent reduction in discharges of elderly patients, accomplished by reducing the number of staffed beds by 6.3 percent. The changes were deemed "significant" by the researchers.
"In general, hospitals seem to behave like a prototypical profit-maximizing firm: They increase output when they are paid higher prices for that output, and they decrease output when the costs of production rise," according to the report.
They did find differences by market and between hospitals in rural and urban areas. And they noted hospitals might be shifting some care from inpatient to outpatient settings in response to cuts in Medicare reimbursements.
Another study in Health Services Research by the same researchers--Chapin White, a senior researcher with the Center for Studying Health System Change, and Vivian Yaling Wu of the Sol Price School of Public Policy--found not-for-profit hospitals balanced out revenue reductions by decreasing operating expenses, while profits declined at the same rate as the reductions among for-profit hospitals.
"This finding suggests that hospitals do not recoup lost Medicare revenues through cost shifting, and, in fact, a loss of Medicare revenue appears to have a negative spillover effect on total revenues," the authors wrote. White previously found a 10 percent cut to Medicare payments could reduce private payer rates by as much as 7.73 percent.
Previous studies have shown hospital pricing already varies wildly, with the typical hospital billing four times what they accept for Medicare reimbursement.