Wednesday, April 26, 2017

What I'm Reading

The following is summarized from a variety of news sources. 

1.    Under a single payor system (like Americare) the non-profit hospital status should disappear.

Four of the 10 hospitals that earned the largest profits from patient care services in 2013 were nonprofit, and the value of the nonprofit hospital tax exemption has grown significantly in recent years. Without action by Congress, nonprofit hospitals' earnings will continue to grow, according to a recent commentary in The American Journal of Medicine by Robert M. Doroghazi, MD.
Dr. Doroghazi, a retired cardiologist and publisher of The Physician Investor, says nonprofit hospitals' earnings began to soar in 1969 when the IRS eliminated charity care as the requirement for tax-exempt status and replaced it with community benefit.

"The less well defined requirements allowed hospitals to substitute programs in community health improvement and determinants of health for direct charity care," wrote Dr. Doroghazi.

Under the new requirements for tax-exempt status, the value of the nonprofit hospital tax exemption increased. A study published in Health Affairs in 2015 estimates tax-exempt hospitals across the nation received a collective $24.6 billion tax break in 2011, up from the congressional Joint Committee on Taxations' $12.6 billion estimate in 2002.

Dr. Doroghazi argues both nonprofit and for-profit hospitals are pushing for higher earnings, which is causing healthcare costs to rise in the U.S.

"I believe the quest for profits between all hospitals, nonprofit and for-profit, has been one of the main drivers causing our healthcare costs to be the highest in the world, far outstripping inflation," he wrote.

To help solve the problem, Dr. Doroghazi says Congress needs to provide a new definition of nonprofit. He recommends a nonprofit hospital be defined as one that has zero profit, "aside from that required to maintain quality operations, prudent reserves and fund future capital needs."

2.    We are not the only organization with these kind of struggles.

Coulee Medical Center in Grand Coulee, Wash., pulled the plug on a Meditech EHR conversion after unexpected costs made the project financially unsustainable, reports The Star.

Coulee Medical Center began converting its existing EHR to Meditech's platform in 2014. Hospital officials initially projected the project to cost $1.3 million, but unanticipated ancillary costs associated with the conversion caused the hospital to overshoot its budget.

Particular provisions baked into Coulee Medical Center's contract with Meditech required the hospital to purchase software add-ons to continue the conversion. Those costs were not included in the hospital's initial budget.

Hospital CEO Jonathan Smith said the process of buying and implementing Meditech's EHR software was like buying "a car without an engine, brakes or exhaust," according to the article.

So far Coulee Medical Center spent $1.7 million on the conversion. Hospital officials estimated it could cost up to $4 million to complete the project, according to the article. Administrators decided to quit funding the conversion Nov. 2.

"A hospital this size just can't incur those types of costs," Mr. Smith told The Star.

3.    When Trump threatened to suspend subsidy payments to save money and force ACA repeal, he was actually costing taxpayers more.

Ending cost-sharing reduction payments the government makes directly to insurers to subsidize coverage for low-income Americans on the ACA exchanges would cost the federal government an additional $12.3 billion in premium tax credits next year, but save only $10 billion, according to a new analysis from the Kaiser Family Foundation.

Future funding for the cost-sharing reductions remains uncertain amid a lawsuit filed by House Republicans challenging the legality of funding the payments without specific appropriation. In May 2016, a federal judge ruled in favor of the GOP, which brought the lawsuit against the Obama administration. The cost-sharing reductions have continued pending an appeal by the Obama administration. Now, the KFF notes, the Trump administration or a court order could potentially put an end to the payments.

If that occurs, insurers would need to raise silver premiums by about 19 percent on average in 2018 to compensate for the loss of cost-sharing reductions, according to the analysis. The KFF estimates premium increases would be about 15 percent on average in states that expanded Medicaid under the ACA and about 21 percent on average in states that did not.

With the premium increases, the federal government would take on additional costs for consumer tax credits. Overall, ending the cost-sharing reductions would result in a $2.3 billion net increase in cost to the federal government, according to the analysis.

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