Profit in Danger?

In the wake of reforms, healthcare providers concerned about the bottom line

It’s been 10 months since the initial wave of healthcare reform took effect across the nation. Since that time, individuals under the age of 65 with pre-existing conditions and children have enjoyed greater, more affordable coverage. In the state of Washington, health reform will allow for 536,000 residents to gain coverage by 2019, according to the national nonprofit Families USA. However, with reform comes an unsteady balancing act – at least where healthcare providers’ bottom lines are concerned.

“Most of what healthcare reform brings initially is payment reform,” said Trent Green, senior vice president of Legacy Health System, which owns Legacy Salmon Creek Medical Center in Vancouver.

According to Green, the result of payment reform is more people having healthcare insurance – a desirable outcome from a societal standpoint. However, he said it also causes many doctors, nurses and hospitals to brace for a splash of red ink on their bottom lines.

“The paradox is we’re going to cover more people in this country, which is good,” Green said. “But we [hospitals] are going to be paid less for the care that individuals receive. No one knows how that’s going to shake out.”

Already, many healthcare providers complain about reimbursement rates for government-funded Medicare, which they say is offset by private insurance payments that are more apt to cover medical costs. With an increase in patients entering the healthcare system, many providers now worry that the coverage bubble may worsen their organization’s financial position.

So far, healthcare providers say they’re not seeing any significant changes to their operations – or profit and loss statements. However, with an expected higher volume of patients filtering through the system, organizations are looking at their modes of operation and focusing on streamlining their services.

“We’re looking at investment in activities and systems that really improve the cost side of the equation,” Green said.

According to Green, IT will play a key role in streamlining medical services and eliminating clunky traditional jobs, such as the old-fashioned medical transcriptionist who types a doctor’s notes. Healthcare providers are also banking on IT to make strides in preemptive care.

“[Preventative care] is a much better experience for patients and more cost-effective than an emergency room visit, which is a very expensive place for individuals to interact with our healthcare system,” said Green.

Speaking of emergency room visits, historically, the ER has been the medical care of last resort for the poor and uninsured. When the sagging economy shed jobs, ER visits went through the roof – charity cases at Southwest Washington Medical Center rose 52 percent to $39.9 million from 2008 to 2009, according to newspaper reports. As more people qualify for care under the new health reforms, providers hope expensive emergency room care will decline.

Kenneth Cole, public affairs coordinator at Vancouver’s Southwest Washington Medical Center, hopes the funding part of the health reform equation is figured out. In addition, Cole said he hopes patients will be prompted to have and build lasting relationships with primary care physicians.

Small businesses, many of which are struggling to provide healthcare coverage, have a funding part of the equation to solve of their own. According to Families USA, the solution should come from tax credits and a more competitive market. The organization said new exchanges will provide a marketplace where small businesses can shop for coverage that is comprehensive and affordable.

Meanwhile, nontraditional healthcare providers we spoke to say recent health care reforms haven’t had much of an effect (positive or negative) on their bottom lines – at least not yet.

“[Healthcare reform] hasn’t affected my business,” said Susan McCarthy, an acupuncturist at Spirit of Health Wellness Clinic and Learning Center Vancouver. “We’re not seeing any change in the type of patient, volume or ability to pay.”