At the Intersection of Health, Health Care and Policy Cite this article as: John K. Iglehart An Uncertain Environment For US Hospitals Health Affairs, 33, no.5 (2014):734 doi: 10.1377/hlthaff.2014.0413

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DOI: 10.1377/hlthaff.2014.0413

An Uncertain Environment For US Hospitals by john k. iglehart

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ospitals in the United States are a collection of not-for-profit, forprofit, and governmentsponsored organizations that provide services accounting for one-third of annual national spending for health care. Many hospitals are pillars of their communities as large employers; profitable businesses; and, in their provision of uncompensated care, social welfare agencies. In this Health Affairs variety issue, authors discuss matters that are disrupting hospitals and their medical staffs, from the effects of the recession to the payment reforms and organizational restructuring called for in the Afford­ able Care Act (ACA). Despite the unanimous opposition of Republicans, the American Hospital Association and American Medical Association supported enactment of the ACA because it expanded coverage, reduced the uncompensated care burden, and raised hopes that Congress would replace Medicare’s despised physician payment formula.

increases over the period 1980–2006. Using data on the length of procedures, Elizabeth Munnich and Stephen Parente find that ambulatory surgery centers provide a lower-cost alternative to hospitals for outpatient surgeries.

hospital finances The recession hit hospitals hard, as Gloria Bazzoli, Naleef Fareed, and Teresa Waters write, with their expenditures overall growing at historically slow rates. The weak finances that saddle most safety-net hospitals continued but did not worsen over the 2007–10 period, while the strongest individual facilities and systems returned to a healthy state after the recession. Teresa Coughlin and coauthors estimate that providers’ uncompensated care costs in 2013 totaled between $74.9 billion and $84.9 billion. Martha Starr, Laura Dominiak, and Ana Aizcorbe conclude that rising treatment costs accounted for 70 percent of real average spending

results from standardizing care Standardization of care is often decried by physicians as “cookbook medicine.” But David Cook and co­authors report impressive results from a Mayo Clinic project based on a uniform treatment approach deemed clinically appropriate for two-thirds of its adult cardiac patients. The effort reduced resource use, length-of-stay, and costs compared to care provided to patients with similar diagnoses in the base year of 2008. In a paper examining a different model, Laurence Baker, Kate Bundorf, and Daniel Kessler find that hospital ownership of physician practices is associated with higher prices and spending,

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readmission rates Federal efforts to prod hospitals to reduce their thirty-day patient readmission rate or face penalties have focused greater attention on whether socioeconomic factors influence these rates. The Centers for Medicare and Medicaid Services (CMS) does not consider a patient’s socioeconomic status when it calculates readmission rates. Elna Nagasako and colleagues compared CMS’s policy to an “enriched” model that included census tract–level socioeconomic data—poverty rate, educational attainment, and housing vacancy rate—in their calculations. Examining the results of these two approaches using Missouri hospital data, they found that “inclusion of these factors had a pronounced effect on calculated hospital readmission rates.”

while looser contractual ties with doctors reduce the frequency of hospital admissions—but only modestly. These two papers, as well as Munnich and Parente’s and one other, were presented at a National Bureau of Econom­ ic Research conference on hospital organization and productivity, Harwich, Massachusetts, October 4–5, 2013. other topics Brendan Saloner, Neel Koyawala, and Genevieve Kenney report that by 2011 coverage for low-income immigrant children increased 24.5 percent under the Children’s Health Insurance Program Reauthorization Act of 2009. Joseph Dieleman and coauthors estimate that global health development assistance remained steady in 2013 at about $31.3 billion, but a lack of alignment between disease burden, income, and funding reveals potential for improvement in resource allocation. Emily Wang and coauthors report that the high incarceration rates among black men enrolled in clinical studies over three decades may have accounted for a substantial loss to follow-up because of federal restrictions on inmates’ participation in research. And Benjamin Sommers analyzed comparative data on recent cancellations of nongroup health insurance plans that Republicans had attributed to the ACA, along with census data for the period 2008–11, before the law took effect. Over both time periods, the nongroup market was characterized by high turnover, which suggests that the highly publicized changes in insurance coverage were not a direct result of the reform law. leadership change On March 31, 2014, Project HOPE announced that Alan Weil will become the next editor-in-chief of Health Affairs, effective June 2. Alan comes to Health Affairs after nearly a decade of leading the National Academy for State Health Policy and has also served on the journal’s editorial board since 2007. In the June issue he will offer some of his thoughts on Health Affairs’ next steps. n

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An uncertain environment for US hospitals.

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