IBJNews

Indiana’s hospitals face Obamacare timing problem

Back to TopCommentsE-mailPrintBookmark and Share

Obamacare is creating a timing problem for Indiana hospitals.

The delays of the employer mandate penalties that are expected to boost private insurance coverage, along with ongoing negotiations on an expansion of Medicaid in Indiana, mean it will be another year or two before hospitals see the additional revenue the law was supposed to bring them.

The Obama administration, which already said it would not enforce employer taxes for failing to provide affordable health insurance until 2015, issued another year’s delay Feb. 10 for companies with 50 to 99 employees.

Those moves are “credit negative” for not-for-profit hospitals, according to report issued last week by Moody’s Investors Service.

“The delay in the employer mandate causes a timing mismatch between the benefit of fewer uninsured patients and the negative impact hospitals face related to reduced payment updates and cuts to Medicare and Medicaid,” Moody’s analyst Sarah Vennekotter wrote in a Feb. 20 report.

Indeed, Obamacare’s cuts to hospital reimbursement, along with additional cuts passed as part of Congress’ latest budget agreements, are already taking a tangible toll.

Those cuts will total more than $6.5 billion between 2010 and 2019 for the roughly 165 hospitals in Indiana, according to the Indiana Hospital Association. That’s about $654 million per year, on average, over the decade.

Indiana hospitals bring in revenue of roughly $14 billion a year. So the federal cuts equal about 4 percent of hospitals’ net income. But cuts of that magnitude would effectively wipe out hospital profits.

And for rural hospitals, where profit margins are thinner, the cuts are pushing them into the red—if not matched by offsetting expense cuts.

Hospitals have responded with expense cuts. Three of the nation’s largest hospital layoffs last year occurred in Indiana, at Franciscan Alliance, Indiana University Health and St. Vincent Health. And smaller, county-owned hospitals have been cutting, too.

The hospitals facing the biggest reimbursement reductions serve lots of Medicaid patients and previously received “disproportionate share” payments for caring for a higher-than-normal number of poor patients. In Indianapolis, that’s Eskenazi Health, IU Health’s Methodist Hospital and Community Health Network’s East hospital.

But pretty soon, the cuts won’t just be staff; it will be entire services, warned Ed Abel, a hospital accountant at Indianapolis-based Blue & Co. He noted that roughly 20 percent of all Indiana hospitals don’t deliver babies—except in emergencies. Literally, every other year, more hospitals join that list.

“Sooner or later, whether they like it or not, they are going to have to consider whether they can continue to perform all the services they do,” Abel said.

The Obamacare cuts are difficult because they are certain, Abel said, while the benefits of coverage expansion can’t be quantified yet.

In Massachusetts, which passed a system similar to Obamacare in 2006, employer-sponsored coverage had increased 1 percentage point by 2013, even as the rest of the nation saw a 5.7-point decline in employer coverage, according to a report by the PricewaterhouseCoopers consulting firm.

Also, Indiana hospitals are hoping Gov. Mike Pence can make a deal with the Obama administration to expand the Healthy Indiana Plan, which would expand health insurance coverage to an estimated 182,000 Hoosiers with incomes below the federal poverty line.

If both those things happen, Abel said, hospital revenues should remain roughly where they were before Obamacare—depending on which hospital you’re talking about.

“There are some hospital executives that feel like it will result in an increase in payment, and there are some that think it will result in a decrease in payment. It’s kind of a glass-half-full, glass-half-empty sort of thing,” Abel. “The problem is, we don’t really know how much is being poured into the glass.”

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
thisissue1-092914.jpg 092914

Subscribe to IBJ
  1. Here are a few candidates for this new group, "ripped from the headlines." First up, that bizzaro State Senator Brent Waltz; secondly, the unethical Todd Huston, and his contractual arrangements scheme; Finally, but not least of all, the dishonorable Eric Turner. What sayeth you Greg Zoeller?

  2. Good day. I can't hide this great testimony that take place in my life I will love everyone to know it and be partaker that is why I always place it on answer, I am Mrs,Natalie Cuttaia by name, I live in Texas, United State Of America, I want to thank (Mr.Bruce Brandon) for his kindness upon my family life. I never knew that there is still nice lender like this on internet and earth here. Just some Months Back, I was in search for a loan of $100,000,00 as I was running out of money for feeding and rent. I was scammed $6,800 Dollars and I decided not to involve my self in such business again but a Friend of my introduced me to a loan firm due to my appearance and doings. And I told him that I am not interested of any loan deal anymore but he told me that there is still a nice lender who he will recommend me to, and I made a trial and I am most grateful lucky am I today, I was given a loan amount of $100,000.00usd, by this great Company (Bruce Brandon Loan Company) managed by (Mr.Bruce Brandon) If you are in need of a genuine or legit loan or financial assistance and you can be reliable and trusted of capable of paying back at the due time of the funds I will advice you to, contact him via: ( bruce.brandon071@gmail.com ) And you will be free from scams in the internet. All thanks to Mr.Bruce Brandon You are the one who remove me and my family out of poverty. The reason why i am doing this is that, i promise Mr.Bruce Brandon that if i truly got my loan, i will advertize his company and bring customers to his company. Contact him via ( bruce.brandon071@gmail.com )for the Loan you have been looking for..

  3. Hello, We are firm Organization formed to help people in needs of helps,such as financial help. So if you are going through financial difficulty or you are in any financial mess,and you need funds to start up your own business,or you need loan to settle your debt or pay off your bills,start a nice business, or you are finding it hard to obtain capital loan from local banks,contact us today via email mrsroseberrywilkinsfunds.usa@gmail.com So do not let these opportunity pass you by because Jesus is the same yesterday, today and forever more. Please these is for serious minded and God fearing People. Your Name: Loan Amount: Loan Duration: Valid Cell Phone Number: Thanks for your understanding to your contact as we Await Regards Management Email:mrsroseberrywilkinsfunds.usa@gmail.com

  4. The question is, where could they build a new stadium? It seems in the past year, all the prime spots have been spoken for with potential projects. Maybe in the industrial wasteland area a block past Lucas Oil? I think it needs to be close to the core, if a new stadium is built.

  5. Aldi is generally a great shopping experience. Still, I'm sure YOU wouldn't want to shop there, which I consider a positive.

ADVERTISEMENT