ACA Impact on the Healthcare Industry

Jul 07, 2015 at 02:15 pm by steve


While most companies are struggling to ensure that they have everything in order to comply with the requirements of the Affordable Care Act (ACA), few people outside of the healthcare industry have considered the impact this sweeping legislation will have on this industry. 

It is estimated that as a result of ACA, over 30 million people will gain healthcare. This means that an industry that many feel is already understaffed is going to be even more so as a result of the ACA. These 30 million new healthcare recipients may have a false sense of security thinking that they now have readily available access to healthcare. While one thing ACA did is to offer incentives for individuals to pursue the medical field such as scholarships and loan repayments, it will take time for these to actually impact the short-staffed industry. Until then, this flood of new recipients may lead to longer wait times at the doctor’s office, less time with the doctor, and possibly even limited access to doctors. What does this all mean? Potentially more unhappy patients. 

With the amount of changes mandated by the ACA, there are many ways in which healthcare providers could be affected. As a result of ACA, some healthcare providers fear that they will experience decreases in their rates while seeing an increase in the rules and regulations governing healthcare facilities which will lead to an increase in the amount of paperwork required. This increase in administration will mean additional costs for healthcare providers, which in turn could result in an increased cost of care for the patient. It is estimated that ACA will result in 190 million hours of paperwork per year. This will require additional personnel at medical facilities. 

As a result of the cost of implementing many of the ACA requirements, some hospitals and physician groups are considering mergers in order to address the needs of the evolving healthcare market. This not only decreases costs but also results in shared financial risks, gives them more bargaining power with insurance companies and tends to increase quality and efficiency by coordinating care. While these consolidations may make sense, it is important to remember that the relevant antitrust laws still apply. While enhanced efficiencies and patient care may be laudable goals, potential merger partners must consider the competitive impact of such a merger. Consideration of the competitive impact will require a detailed analysis of the relevant market—both its geographic and product or service components—and the likelihood of increasing reimbursement rates following such a planned merger. Keep in mind that antitrust enforcement agencies will seek input from payors regarding likely competitive effects of a merger as well as the contours of the relevant market.

Some doctors may choose not to merge or consolidate but rather restructure their practice. One possibility would be to offer concierge medicine. Concierge doctors are doctor’s offices that require an annual retainer in exchange for enhanced care and limited patient loads. In today’s fast paced society where time is money, people may become more willing to pay additional money to cut down on the amount of time they have to spend at the doctor’s office. Concierge doctors have grown in popularity since ACA, and this trend is expected to continue.

Another popular trend has been the number of employers switching to Consumer Driven Health Plans (also called high deductible health plans). In these plans the employee pays all or the majority of the initial cost of medical care and then the insurance company picks up after a certain deductible is met. The idea behind consumer driven healthcare is that by placing a substantial amount of the initial cost burden on employees, it will make consumers carefully consider when a trip to the doctor is necessary. While employers did this with the focus on savings, it could also significantly cut down on the number of doctor’s visits and claims. The increase in these plans could help combat the shortage in the healthcare field as it could decrease the number of times people go to the doctor.

These are just a few of the ways that healthcare reform is changing the healthcare industry. It is anticipated that even the delivery of healthcare services will change. For example, in recent years we have seen an increase in the number of medical providers offering telemedicine especially in more rural areas. As ACA evolves, so too will the healthcare industry.  Thus, it may be years before we know its full impact.

 


Robert S. Ellerbrock, III practice with Balch & Bingham where he specializes in Employee Benefits/ERISA.

 

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