Obamacare repeal will swell ranks of self-pay patients, cut revenue for hospitals, report says
The convergence will create a new 'ground zero' for hospitals, with a potential average revenue loss of one percent and increase in AR days.
As Congress works to repeal the Affordable Care Act, the changes anticipated all signal a likely increase in the number of self-pay patients, and that means less revenue for hospitals. That's the word from an analysis by national accounting and consulting firm Crowe Horwath.
In its report, "Self-Pay Becomes Ground Zero for Hospital Margins: Lower Net Revenue Realization Impact Follows," Crowe analyzed a sample of 357 hospitals in Medicaid expansion states as of 2017, using benchmarking data gleaned from their revenue cycle analytics platform.
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From 2013 to 2016, hospitals in Medicaid expansion states saw the number of patients covered by Medicaid increase an average of 6, from 12.3 percent to 18.3 percent. At the same time, the self-pay payer mix dropped by 4 percent, from 7.4 in 2013 to 3.5 percent in 2016, the report showed.
Crowe said thanks to looming healthcare reforms, hospitals need to prepare for more self-pay patients coming back into the mix.
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"Our data shows that for the average hospital, every 2 percent payer mix shift from Medicaid back to self-pay results in a 1 percent reduction in overall net revenue," said Brian Sanderson, managing principal of Crowe healthcare services group.
He also said a hospital's cash flow will be significantly impacted, as balances for the average self-pay patient sit in AR for 96 days, compared to Medicaid balances, which sit in AR for 64 days.
Also, the exodus to high-deductible health plans, which amount to self-pay after insurance, will also continue. The combined fallout of an ACA repeal and migration to HDHPs will increase the self-pay payer mix by 4.2 percent. As a result, total net revenue is expected to decrease 2.8 percent, Crowe estimated.
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Crowe recommended several best practices for hospitals regarding self-pay. First, institute tools and techniques that quickly determine a patient's ability to pay and emphasize positive financial interactions with patients. Also, focus on collecting from the patients who have the means to pay their out-of-pocket expenses. Offer multiple ways for patients to pay, realistic payment plans, discounts, and help with Medicaid enrollment.
Finally, offer pricing transparency, and give patients the opportunity to shop around or even negotiate prices for certain services.
"The simultaneous combination of the ACA repeal and more patients moving to HDHPs is creating 'ground zero' for the average hospital. It's critical that hospitals put practices in place to focus on improving self-pay collections," said Sanderson.
Twitter: @BethJSanborn
