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America’s Essential Hospitals Plagued by Healthcare Cuts

December 19, 2017 BY Alanna Moriarty

America’s Essential Hospitals Plagued by Healthcare Cuts

Federal indecision continues to hinder hospitals and healthcare facilities—particularly those serving the most vulnerable patient populations. For members of America’s Essential Hospitals (AEH), the debates over healthcare reform and program funding could mean decreased access for millions of patients. On Dec. 18, the Centers for Medicare and Medicaid Services (CMS) announced the end of Designated State Health Programs (DSHP) funding, which facilitated healthcare delivery reform. Eliminating programs like this not only impacts insurance coverage and care quality but also restricts the kinds of patients a hospital can serve.

America’s Essential Hospitals is a healthcare industry trade group representing more than 300 members—including over 200 hospitals. The group aims to ensure healthcare access to medically underserved and uninsured Americans by supporting hospitals and care facilities that fulfill a safety net role within a community. AEH provides support for such facilities through legal advocacy, public policy initiatives, care quality improvement measures, educational opportunities for providers, and funding research on topics like health equity and population health.

Top America's Essential Hospitals by Discharges

Hospital Name Discharges Medicaid Discharges Net Patient Revenue (M) Net Medicare/Medicaid Revenue (M)
Orlando Regional Medical Center 84,413 10,490 $1,848 $428
 Jackson Memorial Hospital 54,088 10,640 $1,060  $343
 IU Health Methodist Hospital 47,408 2,726 $2,595 $683
 UF Health Shands Hospital 45,102 2,714  $1,315 $385
 UAB Hospital 43,655 11,103  $1,498 $530
 Vidant Medical Center 41,053  8,194  $1,032 $509
Lee Memorial Hospital 38,682 1,751 $837 $267
University of Kentucky Hospital 37,789 13,783 $1,389 $639
Baystate Medical Center 36,802 3,730 $1,095 $474
UMass Memorial Medical Center 36,732 3,751 $1,488 $775

Fig 1 Data from Definitive Healthcare

Members of America’s Essential Hospitals must meet specific criteria for care provision. Member hospitals offer trauma care, disaster response, conduct industry research, provide professional education, and staff providers whose diversity reflects that of their community. Because AEH member hospitals provide quality care to underserved and uninsured patients, many report that more than half their net patient revenue comes from Medicare and Medicaid.

In November the Centers for Medicare and Medicaid Services (CMS) passed a $1.6 billion budget cut for its 340B drug reimbursement program, effective Jan. 1, 2018. These funding cuts will reduce payments to hospitals by more than 22 percent, and could decrease prescription access for uninsured and impoverished patients. Reduced reimbursement costs are also likely to negatively impact hospital revenue, reducing the number of uninsured or state-insured patients facilities can treat. The AEH, American Hospital Association, and the Association of American Medical Colleges filed a lawsuit against CMS on the grounds that the program changes would reduce patient care access. Uncertainty over healthcare policy has been a consistent problem for providers this year with debates over the repeal and replacement of the Affordable Care Act (ACA) with other, less comprehensive plans.

Federal indecision has already led to increased insurance premiums and even loss of insurance for millions of patients—including children. The Children’s Health Insurance Program (CHIP) provides healthcare coverage to eligible children through Medicaid and other programs and is funded by both the federal and state governments. CHIP expired on Sept. 30 after Congress failed to reauthorize funding for the program in spite of widespread support from elected officials and the general public. In 2016, CHIP covered approximately 9 million children who would not have had access to healthcare coverage otherwise.

Even if Congress reauthorizes CHIP retroactively, which industry experts say is likely, program funding and hospital reimbursement rates could decrease. Facilities serving large populations of Medicare and Medicaid recipients—like AEH member hospitals—would then be at a disadvantage.

Essential Data Compare: America’s Essential Hospitals (AEHs) vs. Non-AEHs

  Avg Discharges Avg Medicaid Charges Avg Net Patient Revenue (M) Avg Net Medicare/Medicaid Revenue (M)
America's Essential Hospitals Member 46,572 6,888 $1,416 $503
Non-Member Hospital 83,678 7,590 $2,175 $745

Fig 2 Data from Definitive Healthcare comparing data from the top 10 hospitals of each type

Industry experts say that cuts like these will keep on coming, at least for the next few years, as the Trump administration has stated its commitment to reducing healthcare spending. The Senate eliminated the ACA individual health insurance mandate in a new tax reform bill. According to the Congressional Budget Office (CBO), the repeal of this tax would save the federal government about $338 billion between 2018 and 2027 due to the reduction of government insurance subsidies for programs like Medicare.  The CBO also estimates more than 13 million people would lose or cancel their coverage as a result and insurance premiums will increase by about 10 percent every year. Without health insurance coverage, fewer American’s will seek preventative care—such as vaccinations and annual wellness exams—which is expected to increase healthcare costs in the long term, hurting both patients and providers.

Learn more about outpatient care centers and the effects of other healthcare industry disruptors at the upcoming HLTH conference, May 6-9 in Las Vegas. Use the code "definitive_150" for $150 off your registration price, and be sure to visit out booth!

Visit the Definitive Blog to read more about hospital EHR implementations and CMS guidelines.

Definitive Healthcare is the leading provider of up-to-date, comprehensive, and integrated data on the healthcare industry. Our database tracks financial and clinical metrics, as well as CMS program participation, on over 8,800 hospitals, 1.5 million physicians, and dozens of other care providers.

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