At RINGO, we follow health care industry trends very closely. Admittedly, it’s an all-consuming endeavor these past few years as the industry has been thrust into chaos. It hasn’t been all bad news, but uncertainty is never a good thing when a hospital or health care system is trying to manage current realities while planning for the future.
It’s why we obsess over ways to ease the managerial burden of tracking timesheets, hiring locum tenens and several other time-intensive processes that administrators face.
Overall, business has increased since the rollout of the Affordable Care Act (ACA). Since its passage, enrollments across the country increased and the rate of cost increases decreased (from 9% to 6%) during the initial ACA push. However, the rate of cost increases are projected to increase in 2018 and enrollments are projected to decline. Even if Congress finds common ground and pursues a legislative option, it’s more than likely that health care will continue to dominate the headlines. All of this has hospital administrations bracing for possible increases in administering care while losing share of reimbursements due to declining enrollments.
Not all of the initial growth in enrollments translated into hospital profits as experiences varied depending upon the level of participation in federal reimbursements from state-to-state. Some hospitals underwent enormous revenue gains in the years since its passage and several were even able to increase margins. How much of the revenue and profit growth is attributable to the ACA is disputed by some. Regardless of where the debate stands from moment to moment, most people who follow heath care closely acknowledge that inherent flaws in the system and legislative uncertainty are pressing hospitals to cut costs while continuing to innovate and improve patient care.
Where Do We Go From Here?
A widely noted case study from the Kaiser Family Foundation that examined Ascension Health found that hospitals in states that participated in the federal reimbursement programs experienced an increase in revenue from new insureds and lower uncompensated costs. It bears noting this study again to provide context for where we might be headed in 2018 and beyond.
From the report: “Overall, hospitals in Medicaid expansion states saw increased Medicaid discharges, increased Medicaid revenue, and decreased cost of care for the poor, while hospitals in non-expansion states saw a very small increase in Medicaid discharges, a decline in Medicaid revenue, and growth in cost of care to the poor.”
Conversations in hospital board rooms throughout the nation are likely centered on the things that they can control instead of trying to predict the shifting Congressional winds. The increased interest in RINGO’s platform is anecdotal, microcosmic evidence of this thinking. The RINGO platform has two important features that are instrumental to administrators. The first is that the platform is vendor neutral so there is very little friction in the onboarding process both internally and externally. More importantly, RINGO saves an average of 23% on temporary labor costs. It’s little wonder why we have found ourselves in the conversation more frequently of late.
“Health care providers, with opportunities to take on more risk and work with employers directly, are focusing on improving care management and optimizing their use of physician extenders and nonclinical staff to keep costs down and optimize patient care.”
One bright spot in the uncertainty is the relative calm being projected by the markets. While industry analysts are clearly vexed by the tenor of the debate surrounding health care, they understand that total failure isn’t an option for such a critical industry. Thus the long-term outlook for hospitals, as seen in this recent Morningstar report, is fairly bullish.
The report acknowledged that “Trump’s executive orders on association health plans and cost-sharing reduction subsidies would potentially lead to marginally lower volume and higher bad-debt expense as patients drop coverage, lose benefits, or face higher out-of-pocket costs.” However, the report mitigates this fear by saying, “Given the small exposure of most health care facilities to exchange patients, we don’t anticipate dramatic shifts in our fair value estimates, moat ratings, or moat trend ratings for the service providers we cover.”
In practical terms, fewer insured patients means fewer reimbursement and a return to emergency room care. That’s a short-term negative trend hospitals must brace for.
Let’s turn our attention back to the short-term for a moment. A shortened enrollment window, fewer exchange options and the possibility of disappearing or declining subsidies will have a deleterious impact on the greater patient population’s ability to pay. Hospitals must have a strategy to deal with this reality in the coming months and maybe even years. As much as we tend to agree with industry analysts who understand the cyclical nature of the health care debate and therefore believe that policy will stabilize in the years to come, there are hard choices to make in the interim.
Health Care Finance News recently spoke to this issue directly saying, “Higher uninsured rates puts providers at risk for treating those without coverage who may also not be able to pay for care out-of-pocket.” It’s an obvious point that needed to be stated. They reference a survey that found, “the largest increases in the number of uninsured is from lower-income and middle-income adults rather than from higher-income consumers. The 1.4 percent increase represents 3.5 million Americans.”
These are very real numbers that will force belt-tightening, though it’s not large enough to warrant panic. One of the most valuable pieces of feedback we typically receive is that RINGO provides great clarity to human resources and finance. Managing labor and finding cost savings wherever possible without compromising care is essential. Often, departments are shocked to see their contingent labor spend in full transparent view and remark on how quickly they were able to adjust to reduce needless overtime expenditures The ability to be agile in a turbulent environment will help hospitals maintain profit margins without cutting into core service areas and without sacrificing quality of patient care.