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Hospitals relieved by health reform decision, wary of future cuts

California’s hospital leaders and many health providers on Thursday hailed a more stable future under a reaffirmed health reform law, with millions more insured patients who will be able to pay their medical bills.

Dr. Mark Apfel works at the Anderson Valley Health Center. (Lauren M. Whaley/CHCF Center for Health Reporting)

In a state with the nation’s largest uninsured population, 7 million, the Affordable Care Act is expected to relieve overburdened emergency rooms, stabilize financially strapped safety-net hospitals and clinics and treat patients early so they don’t need to be hospitalized.

But, some warned that despite the Supreme Court’s ruling, future funding from Washington and Sacramento is not assured.

“Until government budgets get back on track, it’s still an uncertain time for hospitals,” said health care economist Glenn Melnick, a RAND consultant and USC professor who has studied California’s hospitals for decades.

Big questions remain concerning Medicare and Medicaid funding, he said.  “I think providers will continue to be cautious. They’re not going to start building new buildings.”

Still, many health care executives expressed relief. “Now the uncertainty is taken away and we can move faster than we did before,” said Chris Van Gorder, president and CEO of Scripps Health in San Diego County.

“It sets the stage for moving forward together without a cloud,” said Duane Dauner, president and chief executive officer of the California Hospital Assn., the state’s leading industry group. 

Rural counties face their own challenges.

“In some counties you don’t have a hospital, or dental, or specialties,” said Lee Kemper, executive director of the Sacramento-based County Medical Services Program, which arranges for indigent care in 34 rural counties. “That becomes a real planning challenge… We’ve still got work to do.”

On Wall Street, investors responded enthusiastically to the court’s decision, with hospital stocks surging.

The state’s hospitals have devoted more than two years gearing up for reform, preparing for more paying patients, expanding outpatient clinics and placing a new emphasis on preventive care.

The health reform act will help bolster the state’s so-called safety net hospitals, public hospitals and other facilities—often with religious affiliations--that traditionally have cared for the state’s uninsured and low-income residents.

For instance, Los Angeles County treated and discharged 27,000 uninsured patients last year at its three general acute-care hospitals: County USC Medical Center, Harbor-UCLA Medical Center and Olive View-UCLA Center.  

Now, many of those patients will be able to pay for their care, under subsidized insurance or an expanded Medi-Cal program.

“It’s a tremendous step forward. This is the largest expansion of health insurance since (President) Johnson,” said Dr. Mitchell H. Katz, director of the Los Angeles County Department of Health Services, one of the nation’s largest health departments.

To prepare for the new wave of insured patients, Katz said, “Most of the increase in volume needs to be on the outpatient side…. I want evening clinics. I want Saturday clinics. Let’s not build more health centers. Let’s expand ours.”

Like some hospital administrators, the California Medical Assn., which represents 35,000 doctors statewide, also expressed concern about the murky future of federal funding. Although the group has supported the individual mandate, it believes that the Accountable Care Act leaves Medicare and Medicaid programs “grossly underfunded,” the group said in a statement.

Many patients who will newly qualify for Medicaid in 2014 under the health reform will turn to community clinics, which had the path for billions in federal funding cleared by Thursday’s high court decision.

The health law grants clinics across the nation a total of $11 billion to beef up their health infrastructure.

Clinics nationwide had already drawn down about $3.5 billion from that pot, and feared the spigot would be turned off if the Supreme Court had invalidated the law. 

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© 2014 California Healthcare Foundation Center for Health Reporting

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