Hospitals focus on value as King v. Burwell clears out financial uncertainty

While the Supreme Court decision in King v. Burwell that cleared subsidized health insurance premiums under the Affordable Care Act removed a lot of uncertainty from healthcare finance, little has changed when it comes to hospitals' access to debt. But in the long run, as hospitals switch to value-based pay, experts say that may change.

Before the ruling, there was concern that coverage levels would drop in those states with federal exchanges if the subsidies could not be paid, which could have boosted levels of uncompensated care if patients could no longer afford their premiums. But with the subsidies upheld, many credit ratings agencies upped their views in the sector.

So far, however, that's all that's changed.

[Also: Supreme court upholds Obamacare subsidies]

"I don't think that we have seen any differences in hospital access to capital since the ruling," said Jim Landman, director of healthcare finance policy, perspectives, and analysis at Healthcare Financial Management Association. "I think the assumption was always that the court would not go against the government."

The biggest impact may be that the wording of the opinion actually lessened the uncertainty of further judicial challenges to the Affordable Care Act.

"The court could have decided that the legislative language was ambiguous which would have thrown it to the agencies to interpret with regulation," said Landman. "This would have added uncertainty because the next administration could have interpreted it in a different way."

Under the actual opinion, the majority of the Court gave an unambiguous reading to the law, limiting a successor administration's ability to reinterpret it.

What changes?

"The outcome to individual institutions will be two-fold," said Paul Keckley, managing director with the Navigant Center for Healthcare Research and Policy Analysis. "One is that it does give organizations a greater visibility as to their bad debt levels. Secondly, it allows institutions to deploy capital to the major elements of the law calling for transitions to value-based reimbursements."

It's the push towards value over volume that's driving hospitals to seek capital.

Like Healthcare Finance on Facebook

"Whether the Court tweaked or redid the underpinnings of the ACA, at the end of the day a need to bend the cost curve and get better quality and outcome results was going to continue whichever shoe box it got fit into," said Mark Bogen, CFO at South Nassau Communities Hospital in Oceanside, New York.  "From my perspective, we never worried or focused all that much on how the Supreme Court would ultimately decide."

While there are no indications that access to capital has increased after the decision, another outcome might have caused problems after the fact. One of the major assumptions was that with greater expansion of coverage would come higher utilization of services with more people being able to pay for them.

"It would have been more difficult to make the investments in the infrastructure needed to help identify and change behaviors to meet quality and satisfaction goals," said Bogen. "Greater coverage and less uncompensated care certainly helps to fund those initiatives."

Twitter: @HC_Finance