I track the performance of provider organizations on a routine basis. And a line in a recent report (see Tenet Cites Good News Under Net Loss) in Modern Healthcare on Tenet Healthcare Corporation’s financial results caught my eye. The statement – “…the chain saw a 17% increase in Medicaid admissions in its four states that expanded Medicaid eligibility for low-income adults. As a result, Tenet’s uninsured and charity-care admissions declined by a third in those states….”
My surprise was two-fold. First, the speed of the change. This was Tenet’s financial results for the first quarter of 2014 – it didn’t take very long to see the effects of Medicaid expansion. The other was the magnitude – the 17%. I’m not sure if this 17% is just a “swap” of uninsured patients covered via charity care, or a sign of pent-up demand representing an increase in admissions. Either way, the change is significant.
That statement was accompanied by a second: “The company also said the number of patients with insurance purchased from an exchange is growing month over month, a trend that continued into the second quarter….” This is another early indication of the gradual effect that we’ll see of the health insurance exchange (see How Has The PPACA Moved The Needle On Health Insurance Enrollment?).
If it turns out that this experience of Tenet is similar to other hospital systems, there are some interesting implications for the field:
- The gradual decline of disproportionate share payments will become even more meaningful to hospital systems’ bottom lines (see What Is DSH & Why Should You Care? and CMS Issues Interim Final Rule On Medicare DSH Payments).
- Health care system investment in states that have expanded Medicaid will increase significantly in the states that have expanded Medicaid – and dwindle in other states (see PPACA Created A New U.S. Health & Human Service Map, Medicaid Expansion: Bringing It Closer To Home and How Many Consumers With An SMI Or Addiction Will Be Covered Under Medicaid Expansion?).
- To prevent a “surge” in inpatient utilization, Medicaid managed care plans and health insurance exchange health plans will consider more performance-based reimbursement and narrow networks – particularly for inpatient care (see 40 States Increased Prevalence of Medicaid Managed Care In 2012 Or Are Planning To In 2013 and Narrow Networks Happening By Design & By Default).
- Performance-based reimbursement in those plans will focus on total use of inpatient care, including readmissions (see Financing Change the Key to Reducing Readmissions).
We’ll keep you posted on whether these initial changes reported by one health care organization are an initial “blip” on our radar screen, or a long-term trend. Stay tuned.