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Healthcare industry blues for 2014?

Posted: January 3, 2014 9:55 a.m.
Updated: January 6, 2014 5:00 a.m.

As I spelled out near the end of last month, the biggest local story of 2013 was KershawHealth. As faithful readers know, as the healthcare organization celebrated its centennial, it became further bogged down by losses caused primarily by external factors. Those factors include continuing shifts -- thanks to the economic fallout of the last few years -- from inpatient to outpatient volumes, cuts in governmental and commercial reimbursements and South Carolina’s decision not to expand Medicaid.

Much of these and other, related factors, are impacting hospitals across the state and the nation. 2013 was not a great year for the healthcare industry from a business point of view. (I would argue, as KershawHealth employees have, that the quality of care has never been better. Disclosure: I’ve partaken of KershawHealth services in the last year and have no complaints.)

Taking a larger view of the industry, there are troubling signs for 2014.

One of the biggest headlines in the waning days of the year just ended was that lawyers representing Tuomey Healthcare System in Sumter warned that the hospital could close if it has to pay out a massive $237.45 million judgment in a false Medicare claims case. According to media reports, a federal jury found that Tuomey entered into part-time contracts with physicians in order to guarantee it would earn referral fees from those doctor’s procedures. That, according to one account I read, is considered an illegal kickback under Medicare regulations. Prosecutors alleged Tuomey collected $39 million in “fraudulent” Medicare claims during a four-year period thanks to those alliances.

While there’s some hope for an out-of-court settlement, the idea of shutting down a major hospital like that is frightening.

In comparison, the idea of shutting KershawHealth down at some point seems much less plausible as a means of averting a predicted $32 million loss by 2018. The more likely scenario claimed by some here is that the healthcare system might be sold and that it might pare its offerings down to core services.

Let’s move to the national stage. On New Year’s Day, USA Today published an article about healthcare changes to watch for in 2014. USA Today posted the article because, of course, Wednesday marked Day One of the Affordable Care Act being in “full” force. (I put that in quotes because a number of ACA provisions have been delayed.)

First and foremost, of course, are the private exchanges. The question is -- I have to say, “of course” here, too -- whether or not consumers will understand what’s being offered and, therefore, actually get the best deal. Next, the employer mandate: although the start date’s been kicked down to 2015, to meet the deadline, employers with more than 50 employees are having to prepare to meet the requirement to offer health insurance. Will they find ways to get around it, or will the economy have improved enough for businesses to handle the additional expense?

Pricing transparency is next. One of the “good” things, according to USA Today, is that insurers will have to truly tell consumers exactly how much they’re paying for what benefits. Some healthcare providers haven’t begun listing prices for treatments yet, but at least one expert said he expects that to change as transparency kicks in.

Also on the good side (although an expense to contend with at first) is further adoption of electronic records. On the other hand, insurers will likely shrink their networks of providers, making me wonder about the whole “choice” thing. Finally: the states. Will they or won’t they? As I mentioned, South Carolina decided not to expand Medicaid. However, some studies are already showing that more people are learning they’re eligible for Medicaid anyway. Perhaps we’ll end up in an ipso facto Medicaid expansion -- or perhaps this year’s election will force a change, one way or the other.

Speaking of Medicaid expansion, CBS News reported Thursday that a new study shows people who recently enrolled in Medicaid visited emergency rooms 40 percent more frequently than others. In most cases, the study found, they were seeking treatment for things that could have been treated in a doctor’s office -- and at lower costs. CBS said the study should serve as a warning: that as Medicaid expands (either by state mandate or by folks discovering their eligibility), healthcare organizations should prepare for an increase in emergency department visits.

However, CBS reported, there is a benefit: expanding Medicaid appears to improve mental health and “leaves patients more financially stable in the first two years.” On yet another hand, though, it “increases spending for hospitals, primary care and prescriptions and doesn’t produce significant improvements in measures of physical health like blood pressure or cholesterol.” Obviously, a complex question that won’t be answered soon.

CBS also reported, Friday, that “Obamacare” is topping the U.S. House GOP’s post-holiday agenda. There are already various plans to attack the ACA even though Republicans haven’t been able to repeal it. They will focus, CBS reported, on patching over any shortcomings. If they succeed in pushing through any changes, it will continue to make it more -- not less -- difficult for consumers and healthcare providers to prepare for the ACA’s true effects.

One thing is for sure: no matter what happens, healthcare will likely be the biggest story of 2014.


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