Hospitals still face a difficult road ahead with implementation of the Affordable Care Act, but the financial burden of reduced reimbursements and readmission penalties may be lessening while other pressures like consolidation and new care delivery models increase, according to a quarterly survey from Premier Inc.
Although reimbursement cuts from Medicare and insurance carriers remain the most cited trends expected to impact provider bottom lines, the rate decreased significantly to 35.4 percent of respondents down from 46.7 percent in fall 2013.
“There’s no question that reimbursement cuts put a severe strain on tight hospital budgets,” said Michael J. Alkire, Premier’s chief operating officer. “But hospitals have also made great strides in improving operational efficiency and clinical quality, which has enabled them to better manage the reductions.”
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Providers reported a number of initiatives to better control spending and improve overall efficiency. More than three-quarters, 77.5 percent, of C-level executives said they have “resource utilization programs in place to better control the use of expensive supplies and purchased services,” the survey found. This was most pronounced among large hospitals, 87.1 percent, and integrated delivery networks , 82 percent, according to the survey.
Similarly, 60.8 percent use clinical quality programs to help reduce patient length of stay, with smaller hospitals leading the way at 75 percent and IDNs at 72 percent.
Compliance with ACA mandates remains a top driver of costs for most respondents, but it, too, is lessening in importance, down from a high of 36.2 percent of respondents in spring 2012 to 23.2 percent this fall, the survey said. Legislative mandate costs are cited less frequently by large and mid-sized hospitals, which instead report labor as their primary cost driver. Executives also downplay ACA compliance when compared to labor costs, with just 13.3 percent reporting the ACA as a primary cost driver, as opposed to the 27.6 percent who cite labor.
Increasing labor costs may be associated with higher salaries needed to attract scarce primary care doctors. According to the survey, a shortage of primary care physicians remains a concern for 68.3 percent of executives, with the shortage concentrated in the northeast and mid-Atlantic and the southeast regions.
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Large hospitals reported the sharpest primary care shortage, at 77.4 percent and IDNs, at nearly 80 percent. Likewise, both anticipated labor would be their main cost driver.
In addition, an increasing number of hospitals are shifting their focus to the voluntary programs within the ACA. In particular, 26 percent of respondents cited new care delivery and payment models such as ACOs and bundling, which is up from 14.3 percent a year ago. In part, this focus is creating new cost centers in hospitals, including the management of chronic, high utilization patients.
