April 19, 2012

Survey: Affordable Care Act Expected to Reduce Health Care Revenue

highroadsBenefits management leader HighRoads, in a partnership with HR management consulting firm Sullivan, Cotter and Associates (SullivanCotter), has released its inaugural survey addressing employee benefits practices and trends in hospitals and health systems. The survey found that 55 percent of hospitals and health systems expect a revenue drop due to the Affordable Care Act (ACA) while just 12 percent foresee a revenue increase. A further 28 percent reported that they did not yet understand the impact of the Act on revenue.

“Hospital and health system’s financial health has a direct impact on the benefits
offered to healthcare employees,” said Maureen Cotter, Senior Principal, HighRoads. “Even though 70 percent of those surveyed stated that they are committed to providing coverage in the long term, and no organizations have plans to discontinue coverage now or in the future, the coverage provided may take a new shape. In fact, among those surveyed, 42 percent plan to become an accountable care organization (ACO) and 18 percent plan to structure their employee health plan as an ACO-like program.”

Comparing health systems and hospitals to other industries, the survey found that the group had an average employee enrollment of 66 percent in PPO or POS plans compared to 62 percent in the general industry. Hospitals and health systems reported a 25 percent enrollment in health maintenance organizations as opposed to 19 percent of workers in the general industry. Consumer-directed health plans say a much lower rate of enrollment for employers of health systems and hospitals compared with the general industry, reporting a 9 percent participation rate compared to the general industry average of 15 percent. Finally, over 80 percent of hospitals and health systems encourage their employees to use their facilities or providers but cost savings are not noticeably greater than those in general industry.

“Hospitals and health systems have unique benefits management challenges that may be magnified by ACA requirements. By looking exclusively at employee benefits
trend information for this distinct market, we hope to enable hospitals and health systems to optimize their benefits plans to better provide for their employees while lowering overall costs to their organization,” said Michael Gaal, Senior Consultant at SullivanCotter.

Read more news in Benefits

Joshua Bjerke, from Savannah, Georgia, focuses on articles involving the labor force, economy, and HR topics including new technology and workplace news. Joshua has a B.A. in Political Science with a Minor in International Studies and is currently pursuing his M.A. in International Security.