Hospital Economics and Healthcare Reform
- VOLUME XV, ISSUE 10
- Executive Insights
Conventional wisdom holds that U.S. hospitals will be net beneficiaries of healthcare reform. After all, hospitals currently care for many patients who are uninsured and cannot pay their medical bills. As the Affordable Care Act (ACA) moves more people into insurance coverage, hospitals will be reimbursed through Medicaid for these patients.
However, this conventional wisdom is contingent upon a key assumption: that the uplift from Medicaid expansion will overcome other negative macro forces that will simultaneously affect hospitals in the same time period. In this new Executive Insights, L.E.K. Consulting examines the impact of healthcare reform and other approaching macro forces in sequence. According to our analysis, the net impact of legislative, structural and demographic factors in the wake of healthcare reform will be materially negative for most hospitals in the country.
The authors argue that hospitals will face such acute pain in the future that they and every other player in the healthcare value chain will be forced to innovate and create new paradigms in order to survive. The authors conclude by identifying the strategies that leading hospitals have developed to prepare for their challenging future.