How Will The Senate’s American Health Care Act (AHCA) Bill Affect Hospitals and Health Systems?

Despite Uncertainty in Healthcare Policy, Some Strategies Remain Unchanged

June 23, 2017

Healthcare Strategist, NBBJ

@dbellef

Editor’s Note: This post has been updated to reflect the name of the Senate bill.

On June 22, Senate Republicans released their version of the American Health Care Act (AHCA), the Better Care Reconciliation Act (BCRA), a proposal to repeal and replace Obamacare. While it has differences in timing and method from the House bill, it maintains core Republican tenets of states’ rights and freedom of choice.

 

What does the Senate bill do?

Whatever final version of the Republican repeal-and-replace legislation emerges from conference, it will almost certainly:

  • Give states much greater latitude in designing their Medicaid programs and individual commercial insurance markets.
  • Put more choice and purchasing power into the customer-patient’s hands, including the option not to purchase health insurance at all.
  • Not add net new dollars into the system, even with the “puts and takes” of tax credits, subsidies and the restoration of disproportionate share hospital (DSH) payments.

And if that isn’t enough, other transitions are already underway:

  • Medicare continues to change how it pays for care, using a variety of methods: bundled payments, accountable care organizations and more.
  • Commercial insurers, in response to their customers, continue to develop a variety of different products to lower the cost to employers, which inevitably passes higher cost on to the customer-patient.

 

What doesn’t the Senate bill do?

It does not address the continuing rise in the cost to produce and deliver healthcare. Whether Republicare, Medicare or commercial care, everyone is just reshuffling how the payer pays — and hopefully reducing the amount. Obamacare was the exception: it put more money into the system but still did nothing to control the rise in cost.

But payers don’t provide care, nor can they control cost. This leaves it in the hands of care providers to figure out new ways of producing and delivering care, as all payers — from individuals, to insurers, to the Federal government — reduce the amount they are willing to pay. It cannot be overstated: no matter what Congress does, over time there will be less third-party money coming into the system, and the customer-patient will be expected to pay more and more out of pocket.

 

What now?

Because this trend will continue independent of healthcare policy, our advice hasn’t changed. Hospitals and health systems should continue to:

  • Form more partnerships with community organizations and others who have deep interests in improving community health.
  • Accelerate the development of lower-cost ambulatory and digital healthcare offerings. We are moving inexorably toward a future where healthcare is highly distributed, in the community, the home and the person.
  • Seek greater operational efficiency. Efficiency and quality go together, and we must raise the bar on both. Technologies and systems now exist in healthcare that can do this, and they should be applied to hospital and ambulatory care alike.

Regardless of whether the Senate proposal passes in its current form, in an altered form or not at all, hospitals and health systems need to accelerate their transition to becoming providers of highly reliable care that is high in quality, is error-free and provides the results it intends to provide. This is what will lower the cost of producing and delivering healthcare for us all.

 

Image courtesy of Benjamin Benschneider/NBBJ.

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