In 2009, tax exempt nonprofit hospitals in the United States spent 7.5% of their operating expenses on community benefits, and more than 85% of those expenditures went to charity care. 2 However, a ...number of hospitals and hospital systems have been criticized for failing to inform low income patients that they may be eligible for charity care, for charging uninsured patients far more than they charge insured patients, and for using aggressive debt collection tactics on people who fail to pay their bills-in some cases, garnishing patients' wages and allowing debt collectors to confront patients in emergency rooms.
U.S. teaching hospitals that qualify as 501(c)(3) organizations (a not-for-profit designation) are required to demonstrate community benefit annually. Increases in health insurance access driven by ...Affordable Care Act (ACA) implementation, along with new regulations, research opportunities, and educational expectations, may be changing hospitals' allocations of community benefit dollars. This study aimed to describe changes in teaching hospitals' community benefit spending between 2012 (pre-ACA implementation) and 2015 (post-ACA implementation), and to explore differences in spending changes between hospitals in Medicaid expansion and nonexpansion states.
In 2017, for each teaching hospital member of the Association of American Medical Colleges' (AAMC's) Council of Teaching Hospitals and Health Systems required to submit Form 990s to the Internal Revenue Service, the authors sought community benefit spending data for 2012 and 2015 as reported on Schedule H.
The analysis included 169 pairs of Form 990s representing 184 AAMC member teaching hospitals (93% of 198 eligible hospitals). Compared with 2012, hospitals in 2015 spent $3.1 billion (20.14%) more on community benefit despite spending $804 million (16.17%) less on charity care. Hospitals in Medicaid expansion states increased spending on subsidized health services and Medicaid shortfalls at rates higher than hospitals in nonexpansion states. The latter increased spending at higher rates on community health improvement and cash/in-kind contributions.
After ACA implementation, teaching hospitals increased their overall community benefit spending while their charity care spending declined. Changes in community benefit spending differed according to states' Medicaid expansion status, demonstrating hospitals' responsiveness to state and local realities.
Private insurers pay widely varying prices for inpatient care across hospitals. Previous research indicates that certain hospitals use market clout to obtain higher payment rates, but there have been ...few in-depth examinations of the relationship between hospital characteristics and pricing power. This study used private insurance claims data to identify hospitals receiving inpatient prices significantly higher or lower than the median in their market. High-price hospitals, compared to other hospitals, tend to be larger; be major teaching hospitals; belong to systems with large market shares; and provide specialized services, such as heart transplants and Level I trauma care. High-price hospitals also receive significant revenues from nonpatient sources, such as state Medicaid disproportionate-share hospital funds, and they enjoy healthy total financial margins. Quality indicators for high-price hospitals were mixed: High-price hospitals fared much better than low-price hospitals did in U.S. News & World Report rankings, which are largely based on reputation, while generally scoring worse on objective measures of quality, such as postsurgical mortality rates. Thus, insurers may face resistance if they attempt to steer patients away from high-price hospitals because these facilities have good reputations and offer specialized services that may be unique in their markets.
Strategic purchasing is not new, rather it first started in Western Europe in the 1960s, as an approach to improving health system responsiveness, as well as for them more effective matching of ...supply and demand. In the 1960s some Western European facilities were affected by empty beds, others by overcrowding. Doctors were not showing up for work, due to the establishment of dual practice. There were consumer queues, and complaints that providers were inhumane. There was a shift purchasers in High Income Countries like Organization and Economic Cooperation for Development (OECD) countries, from paying for inputs to outputs and now outcomes. These challenges are yet to be overcome by non-OECD countries. In this article, we discuss the shift towards strategic purchasing in Middle Income Countries (MICs) and Lower Middle Income Countries (MLICs). There are successful models in both categories of emerging markets. The article begins with an overview of health funding, then focuses on the allocation of funds and strategic purchasing.
As in many health care systems, some Canadian jurisdictions have begun shifting away from global hospital budgets. Payment for episodes of care has begun to be implemented. Starting in 2012, the ...Province of Ontario implemented hospital funding reforms comprising three elements: Global Budgets; Health Based Allocation Method (HBAM); and Quality-Based Procedures (QBP). This evaluation focuses on implementation of QBPs, a procedure/diagnosis-specific funding approach involving a pre-set price per episode of care coupled with best practice clinical pathways. We examined whether or not there was consensus in understanding of the program theory underpinning QBPs and how this may have influenced full and effective implementation of this innovative funding model.
We undertook a formative evaluation of QBP implementation. We used an embedded case study method and in-depth, one-on-one, semi-structured, telephone interviews with key informants at three levels of the health care system: Designers (those who designed the QBP policy); Adoption Supporters (organizations and individuals supporting adoption of QBPs); and Hospital Implementers (those responsible for QBP implementation in hospitals). Thematic analysis involved an inductive approach, incorporating Framework analysis to generate descriptive and explanatory themes that emerged from the data.
Five main findings emerged from our research: (1) Unbeknownst to most key informants, there was neither consistency nor clarity over time among QBP designers in their understanding of the original goal(s) for hospital funding reform; (2) Prior to implementation, the intended hospital funding mechanism transitioned from ABF to QBPs, but most key informants were either unaware of the transition or believe it was intentional; (3) Perception of the primary goal(s) of the policy reform continues to vary within and across all levels of key informants; (4) Four years into implementation, the QBP funding mechanism remains misunderstood; and (5) Ongoing differences in understanding of QBP goals and funding mechanism have created challenges with implementation and difficulties in measuring success.
Policy drift and policy layering affected both the goal and the mechanism of action of hospital funding reform. Lack of early specification in both policy goals and hospital funding mechanism exposed the reform to reactive changes that did not reflect initial intentions. Several challenges further exacerbated implementation of complex hospital funding reforms, including a prolonged implementation schedule, turnover of key staff, and inconsistent messaging over time. These factors altered the trajectory of the hospital funding reforms and created confusion amongst those responsible for implementation. Enacting changes to hospital funding policy through a process that is transparent, collaborative, and intentional may increase the likelihood of achieving intended effects.
The Affordable Care Act (ACA) set in motion payment changes that could put pressure on hospital finances and lead some hospitals to close. Understanding the impact of closures on patient care and ...outcomes is critically important. We identified 195 hospital closures in the United States between 2003 and 2011. We found no significant difference between the change in annual mortality rates for patients living in hospital service areas (HSAs) that experienced one or more closures and the change in rates in matched HSAs without a closure (5.5 percent to 5.2 percent versus 5.4 percent to 5.4 percent, respectively). Nor was there a significant difference in the change in all-cause mortality rates following hospitalization (9.1 percent to 8.2 percent in HSAs with a closure versus 9.0 percent to 8.4 percent in those without a closure). HSAs with a closure had a drop in readmission rates compared to controls (19.4 percent to 18.2 percent versus 18.8 percent to 18.3 percent). Overall, we found no evidence that hospital closures were associated with worse outcomes for patients living in those communities. These findings may offer reassurance to policy makers and clinical leaders concerned about the potential acceleration of hospital closures as a result of health care reform.
Regulated prices are common in markets for medical care. We estimate the effect of changes in regulated reimbursement prices on volume of hospital care based on a reform of hospital financing in ...Germany. Uniquely, this reform changed the overall level of reimbursement—with increasing prices for some hospitals and decreasing prices for others—without directly affecting the relative prices for different groups of patients or types of treatment. Based on administrative data, we find that hospitals react to increasing prices by decreasing the service supply and to decreasing prices by increasing the service supply. Moreover, we find some evidence that volume changes for hospitals with different price changes are nonlinear. We interpret our findings as evidence for a negative income effect of prices on volume of care.
A major issue for the US health care system will be accommodating the needs of the estimated thirty-two million Americans who will gain insurance coverage under the Affordable Care Act by 2019. For ...hospitals, a traditional response to this increased demand might be to add resources, such as more staff and beds. We argue that such actions would be unaffordable and unnecessary. Research has demonstrated that large gains in efficiency can be made through streamlining patient flow and redesigning care processes. We argue that once managed efficiently, US hospitals, on average, could achieve at least an 80-90 percent bed occupancy rate--at least 15 percent higher than the current level--without adding beds at capital costs of approximately $1 million per bed. This article outlines a plan for hospitals to accommodate more patients without increasing beds or staff, and for policy makers to require hospitals to make these changes or provide incentives for them to do so.
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